Demand for diesel cars grows faster than for EVs
The car industry has warned the chancellor that “consumers respond to carrots, not sticks” and “mandates don’t make a market” as EV sales continue to fall short
Chancellor Rachel Reeves has been warned by the bosses of 12 of the UK’s biggest car brands that the government’s Zero Emission Vehicle Mandate will fail without incentives for private electric car buyers.
In an open letter warning that “consumers respond to carrots not sticks” and “mandates don’t make a market”, the execs point to the “unprecedented” £2 billion they’re spending on customer discounts for EVs, without shifting the dial on demand. The latest new car registration figures show that private demand for diesel cars grew at a faster rate than for EVs in September, up 17.1 per cent compared to 3.6 per cent for electric cars.
Fines imposed for missing ZEV Mandate targets will mean reductions in investment, R&D or job cuts, the CEOs say, “with costs invariably passed on, so it is the consumer who pays”.
The punchy letter coincides with new monthly car sales figures showing that while one-in-six new car registrations are zero-emission, the dial on market share for EVs is barely moving.
“The ZEV Mandate demands 22% of every brand’s new car sales and 10% of new van sales be zero emission in 2024,” the letter states. “As an industry we will likely miss those targets and a significant number of brands face the prospect of either buying credits from another company or paying swingeing compliance payments.” Currently, the industry expects EVs to make up 18.5 per cent of the market by the end of this year, which is a considerable shortfall on the 22% target.
The company bosses say that while they share the government’s commitment to net zero, and believe the transition can drive economic growth, “it will only do so if conditions are right and the consumer can afford it”.
They maintain that when the ZEV Mandate was conceived, there was an expectation of steady market growth, ever-cheaper batteries, plentiful materials, cheap energy, low interest rates and growing demand – assumptions that have proven to be flawed.
The letter, written under the auspices of the Society of Motor Manufacturers and Traders, also points to a lack of confidence in the UK’s charging infrastructure as another major barrier. As a result, consumers are holding off new car purchases altogether, with the SMMT pointing to the fact that the average age of a car on UK roads has risen from eight years old to more than nine, year on year.
“The overall market remains around a fifth below pre-Covid levels, with the lowest proportion of private consumer demand on record – a situation even more stark than the 2008 financial crisis that prompted government to step in with the ‘cash for bangers’ scheme,” the execs say.
Pointing to the growth in EV fleet sales driven by company car tax benefits as evidence that incentives do work, the SMMT is calling for a package of measures to support private buyers. It wants to see VAT halved on new EV purchases for three years, changes to the Expensive Car Supplement for road tax which hits EVs hard, and a reduction on VAT rates on public charging.
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