The Government is being urged to halve VAT on brand new electric cars to boost uptake.

While EVs accounted for one in every six new cars registered in 2023, the vast majority of these were snapped up by fleets and business users. In the private sector, though, only one in every 11 new cars registered were electric, leading the Society of Motor Manufacturers and Traders (SMMT) to call on the Government to slash VAT by 50%. 

The trade body says its data shows EV uptake has risen almost 20-fold over the past five years, with the Treasury reaping a VAT windfall due to these vehicles typically having higher purchase prices than their petrol and diesel counterparts.

Halving VAT, the SMMT says, would give Brits an estimated extra £7.7 billion in BEV buying power, encourage an extra 270,000 new car buyers to switch to an EV, and put 1.9 million new electric cars on Britain's roads by the end of 2026.

The organisation also reiterated the UK is the only major European market with no consumer electric car purchase incentives, and yet is the only market with mandated minimum targets for new zero-emission vehicle registrations.

SMMT chief executive Mike Hawes said: “With vehicle supply challenges fading, the new car market is building back with the best year since the pandemic. Energised by fleet investment, particularly in the latest EVs, the challenge for 2024 is to deliver a green recovery. 

"Government has challenged the UK automotive sector with the world’s boldest transition timeline and is investing to ensure we are a major maker of electric vehicles. It must now help all drivers buy into this future, with consumer incentives that will make the UK the leading European market for ZEVs [zero-emission vehicles].”

Slashing VAT in half would boost EV sales from private buyers, says SMMT