UK’s electric car sale falters: calls for tax cuts to revive sales

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New figures suggest that the UK recorded its one-millionth electric automobile last month despite a significant fall in sales.
New figures suggest that the UK recorded its one-millionth electric automobile last month despite a significant fall in sales.

New figures suggest that the UK recorded its one-millionth electric automobile last month despite a significant fall in sales.

Decline in New EV Registrations:

In a concerning development for the UK’s commitment to net-zero emissions, new electric vehicle (EV) registrations by private buyers dropped by a quarter in January. 

This decline poses a potential setback to the country’s ambitious environmental goals.

Overall Downturn in New Car Sales:

The Society of Motor Manufacturers and Traders (SMMT) reported a 16% decrease in new car sales to private customers during the same period. The figures have ignited calls for tax cuts to stimulate EV uptake among private buyers.

Fleet Buyers Driving EV Growth:

While over 20,000 battery electric cars (BEVs) were registered in January, marking a 20% increase year-on-year, the growth has been primarily fueled by fleet buyers. Companies purchasing over 25 units at once have witnessed a surge of over 40% in demand for BEVs.

Private Registrations Fall, Impacting Market Share:

Despite the overall growth in EV registrations, the decline in private registrations has led to electric cars comprising 14% of new vehicles sold in January, slightly below the 2023 figure of 16.5%. 

This shift has raised concerns about achieving the desired market share for EVs.

SMMT’s Call for Government Intervention:

The SMMT is urging the government to use the upcoming budget to halve Value Added Tax (VAT) on electric vehicles, particularly aiming to boost demand from private buyers. 

SMMT’s Mike Hawes emphasized that manufacturers have met the supply demands, and now government support is crucial to incentivize consumer adoption.

Challenges in Affordability:

While EVs offer lower running costs, their upfront prices remain 30-40% higher than traditional petrol and diesel vehicles. The SMMT contends that tax incentives are crucial for stimulating private buyer interest.

Policy Suggestions for Accelerated Adoption:

The SMMT’s call for VAT reduction aligns with a broader plea for supportive policies to expedite the transition to EVs. 

Despite generous tax incentives for businesses and company car users, additional measures are deemed necessary to encourage individual buyers.

Government’s Role in Net Zero Transition:

With the UK aiming to achieve net-zero emissions, the SMMT emphasizes the pivotal role of government policies in aligning with this vision. 

The call for tax cuts aims to facilitate a faster and more widespread transition to electric vehicles, playing a vital role in reducing the nation’s carbon footprint.

Gary Monroe

Gary Monroe is a seasoned contributor to the Los Angeles Business Magazine, where he offers insightful analysis on local business trends and economic developments. With a focus on Los Angeles' dynamic commercial landscape, Gary's articles provide valuable perspectives for entrepreneurs and business professionals in the city.

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