Electric car sales boom is blamed for chancellor’s budget snub

Heavy discounting by manufacturers and dealers is likely to have kept sales of new electric cars close to the highest levels of the year amid a storm of criticism of the chancellor for not doing more to financially support the take-up of zero-emission vehicles.
Leaders of the pro-electric vehicle lobby said they were disappointed and concerned that in the budget Rachel Reeves ignored pleas to incentivise sales of zero-emission vehicles by cutting the 20 per cent VAT and changing the 20 per cent VAT rate at public recharging points to the 5 per cent rate on energy for home charging.
It has been speculated that the chancellor ignored those demands because latest available data on new registrations had appeared to show that in the important number-plate-change sales month of September, the market had found its own solution: cutting the price of electric cars, typically 1.4 times the cost of an equivalent petrol model, to stimulate demand.
September sales data from the Society of Motor Manufacturers and Traders showed that sales of new electric cars rose by 24 per cent year on year, with such vehicles now accounting for one in five cars registered.
However, according to the SMMT, that rate of sales had been achieved by “unprecedented discounting” to clear unsold stock. The trade body said that the high level of price cutting by manufacturers and dealers could not be “sustained indefinitely”.
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Before the latest sales figures for October, due to be published this week, Auto Trader, the car-selling online marketplace, said the indications were that interest in electric cars was still at about 20 per cent of the market, and the level of discounting was seeing the same models change hands on average more than 12 per cent cheaper than a year ago.
However, set against government targets of electric car sales of 22 per cent in 2024 rising to 28 per cent next year, Ian Plummer, Auto Trader’s commercial director, said growth in the zero-emission market was “modest” and that consumer interest might be cooling again after the September high point.
Of the budget in which Reeves reiterated the status quo of tax subsidies for electric company car drivers but no incentives for private buyers, Mike Hawes, chief executive of the SMMT, said: “The lack of substantive measures to support the new car market for electrified vehicles is hugely disappointing.”
He said the previous government had set the “world’s most ambitious electric vehicle transition targets” but a lack of supporting action from it and the present government had left “achievement of those targets in serious doubt”.
Quentin Willson, the motoring broadcaster and founder of the FairCharge pro-electric lobby group, said the chancellor was sending confusing messages by forgoing £3 billion in tax by continuing to freeze fuel duty and yet refusing the estimated few tens of millions of pounds to equalise public and home-recharging VAT.
Thom Groot, chief executive of The Electric Car Scheme, a company car sourcing business, said the fuel tax freeze amounted to nothing but a subsidy on fossil fuel which did nothing to help zero-emission automotive targets.
Of those zero-emission targets, which threaten to fine manufacturers £15,000 for every car sold short of the 22 per cent threshold, Matt Galvin, UK managing director of the electric carmaker Polestar, said: “Policymakers have focused more on punitive measures on manufacturers rather than offering much-needed incentives [for consumers]. It is all sticks, no carrots.”