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Registrations of new all-electric vehicles grew 41.6% year on year in January, accounting for a 21.3% share of a declining car market, but their sales still fall short of government ambitions.

The Society of Motor Manufacturers and Traders says its figures reinforce the need for a review of targets set by the then-Conservative administration for electric cars to hit a 22% share of the new car market last year, and 28% in 2025.

It says that many motorists are still reluctant to make the switch to electric despite significant manufacturer investment both in new products and, last year, more than £4.5 billion worth of discounts.

It points out that private retail buyers still lack meaningful fiscal incentives to buy an EV and, added to this, the introduction of the Vehicle Excise Duty ‘Expensive Car Supplement’ in two months comes “at the worst time” for the industry.

It means EV models costing more than £40,000 – which is the majority on the market – will incur a £3,110 tax bill over the first six years of ownership, compared with zero at present.

The change will impact both the new and used car markets, undermining the goal of a mass market transition, says the SMMT. As a result, it is calling for tax plans to be revised to ensure the system is fair.

January’s figures also showed a continuation of other trends, with petrol car registrations dropping by 15.3% to comprise 50.3% of the market, and diesel down 7.7% to a 6.2% share. Both hybrid electric vehicles (HEVs) and plug-in hybrids (PHEVs) recorded volume growth and saw their market shares rise to 13.2% and 9% respectively.

SMMT chief executive Mike Hawes says that affordability of electric cars remains a major barrier to the government hitting its net zero targets. “The application, therefore, of the ‘Expensive Car Supplement’ to VED on electric vehicles is the wrong measure at the wrong time. Rather than penalising EV buyers, we should be taking every step to encourage more drivers to make the switch, helping meet government, industry and societal climate change goals.”

 

 

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