The UK's Society of Motor Manufacturers and Traders (SMMT) reports that automakers will provide at least £2 billion ($2.6 billion) in discounts on electric vehicles this year. Despite this, the industry is still falling short of the sales targets set by the UK government.
Thanks to steep price cuts, demand for new battery electric vehicles (BEVs) in the UK hit an all-time high in September, with registrations surging 24.4% year-on-year to 56,387 units, capturing a 20.5% market share up from 16.6% last year. In contrast, the total car sales in the UK only increased by 1.1% to 275,239 units over the same timeframe.
For the first nine months of the year, the market share of BEVs in the UK rose slightly from 17.2% at the end of August to 17.8%, with projections suggesting it will reach 18.5% by year-end. However, this remains below the UK government's target of a 22% market share by the end of 2024.
Automakers like Stellantis and Ford, along with SMMT, have expressed concern over the reduction in government incentives for electric vehicles while also attempting to phase out internal combustion engine cars more rapidly. SMMT CEO Mike Hawes mentioned that despite significant investments by automakers in product and market support, the weak UK automotive market is jeopardizing environmental goals and future green investments.
In June, Stellantis, which owns the Vauxhall brand in the UK, warned that it might cease electric vehicle production in the UK unless the government takes more action to stimulate demand. The cancellation of subsidies in several European markets has led to decreased EV demand and profit warnings from Stellantis, Volkswagen Group, BMW Group, and Mercedes-Benz.
If automakers fail to meet carbon emission regulations, they could face fines of up to £15,000 per vehicle. However, they can avoid these penalties by purchasing credits from manufacturers that have exceeded their emission targets. Mike Hawes reiterated the call to halve the value-added tax (VAT) on private consumer purchases of new BEVs to 10% and urged for this measure to remain in place for three years. He also suggested that VAT on public charging services be reduced.
