Government should slash tax to boost EV sales

07th February 2024
erin_baker_headshot.jpg Erin Baker

The UK now has one million electric cars on our roads: that totemic figure was hit in January this year. A million of anything sounds like progress. In the case of electric cars, it’s not. The growth in new electric cars last year was entirely driven by the fleet sector; sales to private consumers - you and I - stalled in their tracks year on year, with their market share stagnant at 16.6 per cent, or 315,000 units, according to figures from the Society of Motor Manufactures and Traders (SMMT).


The used EV market was a different kettle of fish, with sales rising as people caught on to the fact that there was a used-car market for electric vehicles in the first place, and prices dropped for 12 consecutive months thanks to a healthy supply, and more competition from brands.

But what will feed that supply three years down the line, if no one buys a new electric car this year on a three-year finance deal? How, too, will car brands ensure that 22 per cent of the cars they sell are pure electric with no one to take them off their hands? They are locked into that agreement by the Government. How, also, will the Government – be it the Conservatives or Labour – manage to transition the entire new car parc to electric by 2035, or 2030, without buyers?

Last year’s lack of movement in the EV market proves, if further proof were needed, that, without national incentives of some description, no one is going to buy a new electric car of their own volition. The prices are still too high, the wait too long, depreciation too horrific and insurance premiums still staggering.


Yet, both political parties appear to have permanently ruled out the return of Government grants to buy an EV. Carrots are out, sticks are in. Or rather, not even sticks: complete political and private inertia presides. It’s a big hole, with the private backers of public-charging networks grinding on in their acquisition of sites, their paperwork stuck with land owners to get pipes laid, and their attempts to join the queue for fast grid connections to power rapid and ultra-rapid charging points blocked by insane wait times. I heard the other day from a reliable source that any company wishing to install some charging points now is looking at an 18-month process. Worse still, OEMs with UK manufacturing plants are complaining that their efforts to install onsite renewable energy sources such as wind and solar (both for financial and environment reasons) have been met with a laugh, because there’s no one to carry out the installations and grid connections until post 2030 (best careers advice for teenagers now must surely be to train as electricians and set up installation service companies).

So what can we do to put a rocket up the backside of EV sales this year? Unsurprisingly, it’s going to take incentives of some sort, so if no politician will propose bringing back grants to buy, then they must look at softer incentives.

Two very sensible VAT cuts have been tabled. One is proposing slashing VAT from 20pc to 10pc on new-car sales for the next three years. The suggestion is this would drive an extra £7.7bn into the pockets of consumers and an additional 250,000 electric cars onto our roads (a 25 per cent increase) over that three-year period.


The second is a reduction of VAT on public energy, to the five per cent that is charged on domestic electricity. This would slash the price of public charging, which is now more expensive than petrol on some forecourts (it cost me £96 to recharge my Mercedes EQS SUV at a 79p per kWh point last month – unbelievably, it was at a hotel, not even a monstrous motorway forecourt), and stop the deep unfairness of a system which gives tax breaks to those with their own driveways who, by definition, are likely to be wealthier than those dependent on public charging. This feels like a policy ripe for Labour to adopt.

We shall see, come a General Election in the autumn. But be in no doubt, something has to shift dramatically, or, no matter how low EV prices sink, adoption won’t grow by a commensurate amount.

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