Increasing the speed of the switch to electric vehicles dominates the Society of Motor Manufacturers & Traders (SMMT) view as to what the next Government should be doing for UK automotive.

Making his traditional ‘State of the Nation’ presentation to journalists gathered for the annual SMMT Test Day at Millbrook Proving Ground on 23rd May, the industry body’s CEO Mike Hawes presented what he described as three ways to help the UK’s motorists drive towards net zero.

In a speech clearly rapidly modified following the Prime Minister’s announcement less than 24 hours earlier of the 4th July General election date, Hawes provided an analysis of the UK automotive industry as it is now and what needs to be done to maintain progress.

He presented a generally positive picture, with more than £20 billion of investment committed in the last year including Tata’s battery plant in Somerset, Nissan in Sunderland, and BMW building the electric Mini at Cowley, Oxford. “We secured more investment last year than in the preceeding six or seven years put together,” Hawes said, referring back to 2016 when the UK voted for Brexit.

He added that new car registrations were up by 8.4% and those of battery-electric vehicles (BEVs) up by 10.6%, the arrival of the ZEV mandate, which requires BEVs to comprise 22% of a manufacturer’s sales this year (though with various initial flexibilities), will require a lot of work in the second half of the year to increase the current BEV market share of 15.7%.

The SMMT has been forced to revise down its 2024 market share prediction for BEVs to just under 20%, with the 2025 figure predicted to be at about 23 to 24%. “We need to be higher than that to meet compliance, which is why we need to shift the market much more quickly than we are.”

Private peril

While acknowledging that the speed of BEV uptake is being driven by the fleet market – fleet sales have risen from around 55% in 2019 to 80% this year – Hawes did not specifically address the figures behind the headlines, which paint a less rosy picture of the retail market as a whole.

New car sales have been declining for some time, fuelled by several factors including the cost of living and longer finance deals encouraging less frequent changes of vehicle. But in recent times the rate has been speeding up, with year-to-date private sales down 11% and in April by close to 18%.

Instead the SMMT is urging the next Government to boost the rate of EV sales to private buyers, by offering incentives in a similar way to what has clearly worked for the fleet market. “Halving the rate of VAT on BEV sales over the next three years will probably put a quarter of a million BEVs on the road – instead of people buying petrol or diesel, they will be buying EVs,” Hawes said.

The SMMT also wants changes to plans to apply Vehicle Excise Duty for the first time to electric vehicles next year, as the typical cost of an EV will generally put it in the expensive or luxury segment that attracts an extra levy. “These are not necessarily luxury cars – they should be seen as mainstream so they should not be penalised with that additional taxation.”

Finally the SMMT wants to see more charging points, with binding targets for the speed of rollout, and what it describes as fairer taxation. “We need to see (charging points) rolled out even faster than they are being. (The number) went up about 44% last year which is great but it’s not as fast as we need it to go, to give the reassurance to the general motorist ahead of purchase that charging facilities will be there. So we need to see it accelerated.

“One of the ways to really stimulate the market would be to equalise VAT on charging. If you have a driveway at home to charge on the VAT is 5%, if you are doing it on the road it’s 20% for the same unit of energy – that’s unfair and penalises those who don’t have driveways.”

Whether the regime that moves into Downing Street on 5th July will take heed of the SMMT’s lobbying remains to be seen, Certainly in recent times the current Government has appeared to be watering down its commitment to the speed of EV rollout, but there is also an argument that the priority for industry and Government should be ways of stimulating car sales as a whole – not just of EVs…