Government "sleepwalking into EV crisis" after budget snub

Calls were made to cut the VAT on public charging from 20% to the 5% of home charging

Vauxhall boss says budget "has not delivered", with Fiat chief claiming "the switch to electric isn’t a priority for the government"

Carmakers have accused the government of “sleepwalking into an electric vehicle crisis” after Chancellor Jeremy Hunt snubbed calls from across the automotive industry to introduce incentives for electric vehicles.

During his hour-long statement, no benefits were brought in to either incentivise buying or reduce the cost of ownership as the UK gears up to go EV-only in 2035.

This lack of EV incentives has been blasted by carmakers such as Fiat and Vauxhall, the latter a key player in the UK automotive manufacturing sector.

Managing director James Taylor said the budget "has not delivered the acceleration needed to stop the UK’s transition to electric vehicles from stalling".

Calls for buying incentives have become louder since the government's introduction of the ZEV mandate, which legislates that car manufacturers must hit an EV sale target - 22% of their total sales this year.

Car makers argue that private buyers should get the same incentives as fleet buyers.

Taylor said: "Whilst there are strong incentives for company car drivers to make the switch to electric, including for those choosing luxury vehicles, the private buyer who wants a more attainable small or family car receives nothing.  

"If we are to meet the rightly ambitious targets laid out in the ZEV mandate, then there needs to be incentives for private car buyers to make the switch to electric, as there are in the majority of European nations."

Damien Dally, UK boss of Fiat – itself offering its own £3000 EV grant –  was one of the most vocal critics of the budget. 

“It’s hugely disappointing that the Chancellor has failed to reinstate financial incentives for electric vehicle buyers in today’s budget,” he said

“The government has set the direction of travel by enforcing the Zero Emission Vehicle (ZEV) Mandate and Net Zero target, but is doing nothing to incentivise retail customers to drive electric vehicles.”

He added: “The demand for electric vehicles is waning and we are sleepwalking into an electric vehicle crisis. The government is also potentially putting its Net Zero target at risk. 

“Without any government financial incentive there’s no reason for the consumer to make the switch.

“Unfortunately, it seems the switch to electric isn’t a priority for the government.”

The likes of Volkswagen UK boss Alex Smith and the SMMT have also called for a cut in the VAT rate of public charging from 20% to the 5% of home charging.

SMMT chief Mike Hawes said: “Government has been keen to assure the UK automotive industry’s competitiveness, with support for EV development and manufacturing – including £2.1 billion in autumn’s Advanced Manufacturing Plan – but there is little to help consumer demand. 

“Today’s Budget is, therefore, a missed opportunity to deliver fairer tax for a fair transition. Reducing VAT on new EVs, revising vehicle taxation to promote rather than punish going electric, and an end to the VAT ‘pavement penalty’ on public charging would have energised the market. 

“With both Government and industry having statutory requirements to deliver net zero, more still needs to be done to help consumers make the switch.”

The spring budget was also expected to bring an answer on the potential extension to the VED exemption of EVs, which will end in 2025, but Hunt said nothing about this. 

Hunt did, however, confirm that fuel duty will be kept at 5p for another year. He said the duty cut, introduced when fuel prices hit record highs in 2022, would “save the average driver £50 over the next year and bring total savings since the 5p cut was introduced to £250”.

He added: “Lots of families and sole traders depend on their cars. If I did nothing, fuel duty would increase by 13% [from] this month.”

Hunt confirmed this measure was still “temporary” and would again be looked at next year.

This move was described as a “missed opportunity” by Dally, who said the government could’ve ringfenced “some or all the money that would have come from the fuel duty rise” and invest it “into this country’s seemingly dwindling electric vehicle strategy”. 

The announcement was, nevertheless, welcomed by the RAC as “good news”, but the motoring organisation called on more to be done for the effects to be felt by drivers.

Head of policy Simon Williams said: “While it’s good news that fuel duty has been kept low, it’s unlikely drivers will be breathing a collective sigh of relief, as we don’t believe they’ve fully benefited from the cut that was introduced just two years ago due to retailers upping margins to cover their ‘increased costs’. This has meant fuel prices have been higher than they would otherwise have been.

“What’s more, despite today’s positive news, it’s still the case that drivers are once again enduring rising prices at the pumps, sparked by the oil price going up. The average cost of a litre is already up by more than 4p since the start of the year.”