UK "sleepwalking into EV crisis" after government budget snub

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

Vauxhall says budget "has not delivered" and Fiat claims "switch to electric isn’t a priority for the government"

Car makers have accused the UK government of “sleepwalking into an EV crisis” after chancellor Jeremy Hunt snubbed calls from across the industry to introduce EV incentives.

During his hour-long spring budget statement, Hunt announced nothing to either incentivise buying or reduce the cost of owning an EV as the UK gears up to ban new ICE car sales in 2035.

This lack of EV incentives has been blasted by Stellantis-owned brands Fiat and Vauxhall, the latter a key player in the UK automotive manufacturing sector.

Vauxhall 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 (which currently offers its own £3000 grant on EV purchases) 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,” Dally said.

“The government has set the direction of travel by enforcing the zero-emission vehicle mandate and ne-zero target but is doing nothing to incentivise retail customers to drive electric vehicles.

"The demand for electric vehicles is waning and we're 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.”

Mike Hawes, CEO of the Society of Motor Manufacturers and Traders (SMMT), 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 the 5p cut in fuel duty will remain for another year. Duty currently sits at 52.95 pence per litre.

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 have ringfenced “some or all the money that would have come from the fuel duty rise” and invested it “into this country’s seemingly dwindling electric vehicle strategy”. 

Motoring organisation the RAC welcomed it as “good news” but called for more to be done to help 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.”