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EV SALES TARGETS FALL SHORT: New proposals to stimulate electric market could dramatically help the taxi industry

Updated: May 19

Image credit: LEVC

Car manufacturers are set to miss a crucial government target for sales of pure battery electric vehicles (BEVs), the automotive industry’s leading trade group has reported.

The Society of Motor Manufacturers and Traders (SMMT) has briefed the House of Commons Transport Select Committee, revealing that the expected market share for BEVs will only reach 19.8% this year.

This figure falls below the 22% mandate required under the Government's ambitious Zero Emission Vehicle (ZEV) programme. The ZEV mandate's thresholds are scheduled to increase annually, aiming for 80% by 2030 and a complete shift to 100% by 2035, aligning with the prohibition of new petrol and diesel vehicle sales.

Current data from the SMMT indicates that BEVs constitute just 15.7% of new car sales this year, underlining the industry's struggle to meet these progressive targets. Martin Sander, General Manager of Ford’s electric vehicle division, has indicated that the company may have to limit sales of petrol vehicles in the UK to meet the required quotas of EV sales.

Manufacturers not meeting the mandate could face severe penalties, with potential fines of £15,000 for each non-compliant vehicle sold. However, the Government does not anticipate levying these fines this year, citing available "flexibilities" such as the ability for manufacturers to buy credits from competitors who exceed their targets.

To bolster EV sales, Mr Wong from the SMMT has proposed several fiscal measures:

1. A 50% reduction in VAT on EV purchases for the next three years.

2. An exemption from the upcoming luxury car tax for battery-powered vehicles priced above £40,000.

3. A cut in VAT on public EV charging points from 20% to 5%, to match the VAT rate on domestic energy.

Mr Wong also highlighted the increasing variety and capability of BEVs in the UK market, noting there are now over 100 models available, with an average range of 236 miles. This is expected to increase, with new models this year projected to have an average range of around 300 miles.

The proposals by the Society of Motor Manufacturers and Traders (SMMT) to stimulate electric vehicle (EV) sales could significantly impact the UK taxi industry, offering both financial relief and operational benefits.

The proposal to halve the VAT rate on the purchase of EVs for the next three years could dramatically lower the upfront costs of acquiring new electric taxis. This financial incentive makes it more feasible for taxi companies and independent drivers to replace older, less efficient petrol or diesel vehicles with cleaner, more economical electric models. Additionally, the reduction of VAT on public charge points from 20% to 5% could decrease the daily running costs for drivers who rely on these facilities to keep their vehicles operational.

By proposing an exemption from the luxury car tax for EVs costing over £40,000, the SMMT addresses a significant barrier that has kept some of the more premium electric vehicles out of reach for taxi operators. This change would expand the range of vehicles available to taxi services, allowing access to higher-end EVs without the burden of additional taxes. This is particularly beneficial for taxi companies looking to offer more upscale services or those needing larger vehicles, which often come with a higher price tag.

Steve Gooding, Director of the RAC Foundation, said: “Whether it’s buying or running an electric car cost is clearly a key issue, but the mood music from Whitehall suggests there will be no more publicly money to ease buyers into the market. That leaves manufacturers with the task of pitching their products at the right price to drive sales and meet their obligations under the ZEV mandate.

“Cost is critical but so is convenience – car-buyers’ trust in battery-powered travel appears to have stalled in part at least because of the fears – rightly or wrongly – that swapping a petrol or diesel car for something you plug in is going to make life harder rather than easier.

“Drivers want faff-free motoring and that’s clearly still a work in progress when it comes to running and recharging EVs. Industry and government need to tackle the negative perceptions, and quickly, if the ultimate goal of greening road transport is to be achieved at a rapid pace.”


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