The Society of Motor Manufacturers and Traders (SMMT) published new findings on 1 March 2024 showing that would-be electric vehicle buyers are deferring purchases, and used them to call for VAT on new private EV purchases to be halved in the Spring Budget, then five days away1.
The SMMT said that last year just one in 10 potential new car buyers said they would wait until after 2030 to switch, while today around half say they will wait1. It linked the change in sentiment to the government's decision last September to delay the end of sale of pure petrol and diesel cars until 20351. The body described the UK as Europe's only major market without private consumer EV incentives1.
The proposed VAT cut would, on the SMMT's figures, save the average EV adopter around £4,000 off the upfront purchase price, while costing the Treasury less than the scrapped Plug-in Car Grant, at just £1,250 per vehicle1. The SMMT also asked for EVs to be exempt from "expensive car premium" Vehicle Excise Duty rates due to come into force next year, and for public charging VAT to be brought into line with private charging1.
"As more than one in three drivers does not have a driveway and would rely on public chargepoints, it is unreasonable that public charging incurs VAT at four times the rate of private charging."
The SMMT's statement also cited the confirmation that week that a new multi-billion pound EV battery manufacturing facility will be in Somerset, providing 4,000 skilled jobs1. It reported car manufacturing volumes up by a fifth in January, with electrified vehicles accounting for almost one in four made, and commercial vehicle production having its best January for 16 years1.
| SMMT position | Figure given |
|---|---|
| Potential buyers who said they would wait until after 2030, last year | one in 10 |
| Potential buyers who say they will wait, now | around half |
| Saving to the average EV adopter from halving VAT | around £4,000 |
| Cost to the Treasury per vehicle | £1,250 |
| Drivers without a driveway | more than one in three |
Why it matters for households
The figures describe a buying decision rather than a technical one. A household weighing an electric car against a petrol or diesel equivalent faces a higher upfront price, and the SMMT's finding is that a growing share of buyers are choosing to postpone that decision rather than make it1. The VAT treatment of public charging matters most to the more than one in three drivers without a driveway, who cannot charge at home and pay VAT on public charging at four times the rate applied to private charging1. For a home considering an electric vehicle alongside solar panels or a home battery, the charging arrangements available at that property shape both running costs and how much of the car's energy can come from the home itself. The SMMT's comparison is with heat pumps and solar panels, which it says already benefit from similar VAT incentives1. Details of charging at home, including two-way charging, are set out in the site's ev-charging hub and its page on Vehicle-to-Grid and Vehicle-to-Home Charging in the UK.
What happens next
The Spring Budget was due in five days' time, on 6 March 20241. The SMMT also flagged this year's Commercial Vehicle Show on 23-25 April1. Whether the Treasury adopts any of the SMMT's tax requests has not been reported1.
Sources1 cited
- Decarbonisation demands fair taxation - SMMT, smmt.co.uk