Following today’s news that the UK’s automotive trade association – the SMMT – has called for next week’s Budget to include the removal of VAT from the sales of all new battery electric, plug-in hybrid electric and hydrogen fuel cell electric cars;

David Leggett, Automotive Editor at GlobalData, a leading data and analytics company, offers his view:

“We are about to see many more electrified vehicles available on the UK new car market. In 2020, manufacturers will bring more than 23 new battery electric and 10 plug-in hybrid electric cars to the UK to add to the more than 65 already on sale. However, high electric vehicle purchase prices and the poor provision of charging infrastructure threaten continued low market penetration rates.

“GlobalData’s forecasts show that the global production of EVs is set to more than double from around 3% of all light vehicle production to almost 8% by 2024. Indeed, by the mid-2020s global fully electric light vehicle production is forecast to be accelerating beyond 10 million units a year.

“It is vital for the UK automotive industry that it is part of the oncoming electrification wave, supported by buoyant sales of EVs in the home market.

“The SMMT’s suggestion to remove VAT on electric cars is certainly worthy of serious consideration as it would cut the purchase price of a typical electric car by as much as £5,600 and we know that relatively high purchase prices are acting as a disincentive for car buyers to purchase electric vehicles.

“The rapid decline of diesel in the UK marketplace – down from half of the market to around a fifth – also creates an opportunity to stimulate sales of plug-in hybrids which would help the market adjust to electric drive usage. Even more importantly, it would reduce the average CO2 emissions contribution from new cars sold in the UK – which has been rising in recent years, a worrying trend given the UK Government’s highly ambitious CO2 targets. 

“The long term continuation of the UK’s plug-in car grant at current levels and its reintroduction for plug-in hybrids also makes a lot of sense if a realistic pathway to no fossil-fuel burning cars on sale by the deadline of 2035 is to be achieved.”