Wednesday 5 July 2023

UK EV market boom: Industry urges VAT cut on public charging

UK EV market boom: Industry urges VAT cut on public charging

Registrations of battery electric vehicles (BEVs) saw a notable increase of 39.4% in June.

The rise in BEV demand is primarily driven by business and fleet purchases, which benefit from attractive fiscal incentives, according to the latest report by the Society of Motor Manufacturers and Traders (SMMT).

The trade association notes that while manufacturers offer appealing deals for private buyers, further efforts from stakeholders are needed to incentivise BEV purchases.

In the first six months of 2023, close to a million (949,720) new cars were registered in the UK, representing an overall registration increase of 18.4%.

BEV uptake has reached record levels, with 152,968 deliveries so far this year, a significant thirteen-fold increase compared to the same period in 2019 - the current market share of BEVs for 2023 stands at 16.1%.

The industry has called for a reduction in VAT on public charging to encourage faster BEV adoption.

Charging an EV at home offers substantial cost savings of approximately 60-70% per mile compared to refuelling a petrol or diesel vehicle.

Currently, EV owners who charge at home benefit from a reduced VAT rate of 5%, whereas those reliant on public charging networks without access to private parking spaces pay the standard 20% VAT rate.

Mike Hawes, Chief Executive of the SMMT, emphasised the importance of reducing VAT on public EV charging to ensure fairness and attract more individuals to own EVs.

Hawes said: "The new car market is growing back and growing green, as the attractions of electric cars become apparent to more drivers.

"But meeting our climate goals means we have to move even faster. Most electric vehicle owners enjoy the convenience and cost saving of charging at home but those that do not have a driveway or designated parking space must pay four times as much in tax for the same amount of energy.

"This is unfair and risks delaying greater uptake, so cutting VAT on public EV charging will help make owning an EV fairer and attractive to even more people."

In response to the news, Gavin Murray, Hive and EV Director at British Gas said: "If the UK is to keep pace with the electrification curve, we need to see greater collaboration across key stakeholders so that no one is excluded from EV ownership.

"Government and local policymakers must focus on creating a fit-for-purpose framework that supports the role out of accessible and user-friendly fast charging stations to ensure an easy switch for consumers to EVs."

Written by

Bruna Pinhoni

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