Government-backed EV incentives targeted at consumers must be implemented to help ensure mass market take-up, according to the Society of Motor Manufacturers and Traders (SMMT).

The car industry is calling for support for private EV buyers in line with incentives for fleets

While fleets are currently leading the electric transition, private buyers have been hampered by the end of incentives – and the UK car industry is calling for support for consumers in line with incentives for businesses.

Uptake of battery electric cars has soared over the past five years. In 2018, they comprised just 0.7% of the new car market, but are now expected to account for 17.8% by the end of the year. While this is good progress, the market must move even faster to meet net zero ambitions and the proposed zero emission vehicle mandate – and this means delivering a “faster and fairer” mass transition that includes private buyers.

While the shift was originally driven by private consumers, they have since been overtaken by fleets and business buyers. Following 2022’s removal of the Plug-in Car Grant (PiCG), sales to private buyers have fallen from more than one in three, to less than one in four.

Many private drivers plan to go electric but are delaying due to concerns over affordability and uncertainty regarding the availability of a nationwide charging network.

Two-thirds (68%) of non-EV drivers surveyed by Savanta said they want to make the switch, but just 2% plan to invest this year and 17% in 2024 – with more than half saying they will not be ready until 2026 or later.

However, attractive purchase incentives could change all this. Following the removal of the PiCG, the UK is the only major European market with no consumer EV incentives, yet has the most ambitious transition timeline under the 2030 ICE phase-out.

To drive mass market adoption, the car industry is calling for support for private buyers in line with incentives for businesses. It says that while manufacturers already provide attractive purchase incentives, these need to be complemented by government-backed incentives.

For example, reducing VAT on EV purchases would mirror existing discounts on other environmental products such as solar panels and heat pumps and improve Exchequer receipts. Raising the threshold for the Vehicle Excise Duty ‘expensive car supplement’ from its 2017 level to reflect today’s costs – or exempting EVs altogether – would also help. Taxation would also be fairer if VAT on public charging matched home charging at 5%, not 20%.

Furthermore, mandating targets for charge point rollout would help overcome the other issue holding back consumers – insufficient infrastructure. Such measures would improve the attractiveness of EVs to British consumers and flow through to the second-hand market, increasing demand and helping address concerns about the residual value of these new technologies.

Mike Hawes, SMMT chief executive, said: “With a new – and still to be finalised – zero emission vehicle mandate due to revolutionise the market in just over 100 days, supply must be matched by demand. A comprehensive package of measures would encourage households across the UK to go electric now, boosting an industry slowly recovering from the pandemic and delivering benefits for the Exchequer, society and the global environment.”