The purchase of electric vehicles (EVs) by regular drivers has seen a significant decrease of nearly 20% this year. This downturn has led to calls for Chancellor Jeremy Hunt to stimulate the sluggish market by reducing taxes.
In the first two months of 2024, consumer sales of EVs dropped by 17% compared to the same timeframe in the previous year.
Data from the Society of Motor Manufacturers and Traders (SMMT) shows that about 35,900 new battery EVs were registered in January and February, marking a 21% increase from the previous year. However, only 6,500 of these were acquired by private buyers, with the remainder being purchased by businesses or fleet operators, including car rental companies.
This represents a decline in sales to individual consumers from 7,900 vehicles the previous year, a 17% decrease.
Industry experts have expressed concern that these figures indicate a stagnation in the market. The SMMT has highlighted a “triple tax barrier” as a major deterrent for potential buyers.
The SMMT is urging the Chancellor to reduce the VAT on EV purchases and public charging, along with softening the impending road taxes set to commence from the following year.
Mike Hawes, SMMT’s chief executive, emphasized the upcoming Budget as a critical chance for Mr. Hunt to promote sustainable growth, particularly in March, which is traditionally the peak month for the industry. He suggested that addressing the triple tax barrier during this key period would boost EV demand, thereby reducing carbon emissions and stimulating the economy.
According to Hawes, such actions would lead to a quicker and more equitable transition to zero emissions, propelling Britain’s EV ambitions forward.
The SMMT estimates that a reduction in VAT on EV purchases from 20% to 10% could result in an average saving of £4,000 for EV buyers.
On the same Tuesday, executives from the automotive retail group Inchcape forecasted a restrained growth in sales for 2024, attributing this to softness in specific markets.
In response to this announcement, the firm’s stock value experienced a sharp decline, dropping over 10%.
In addition to high taxes on electric vehicles (EVs), factors like unevenly spread charging infrastructure and persistently high purchase costs have been cited as reasons for the recent decline in sales.
This downturn in sales comes in the wake of previous statistics from the Society of Motor Manufacturers and Traders (SMMT) indicating a slight drop in EVs’ share of the new car market, from 16.6% to 16.5% in 2023.
However, there’s a silver lining in the second-hand market, where EV sales almost doubled to 118,973 last year.
Richard Peberdy, UK head of automotive at KPMG, noted: “With ongoing pressure on household budgets and a rise in the cost of car finance, the economic climate remains challenging for many people looking to buy new cars, as well as for those trying to sell them.
Although the used EV market is expanding, the growth in sales of new EVs to consumers has plateaued. Many in the automotive industry are eagerly awaiting this week’s Budget, hoping for measures like VAT cuts on EV purchases and at public charging stations to stimulate demand.”
Fleet operators and businesses continue to be the predominant purchasers of EVs, which has helped to compensate for the decrease in consumer sales.
While businesses still benefit from support and tax incentives for EV purchases, private buyers lost access to grant funding in 2022.
