From April, electric cars costing more than £40,000 – the great majority of those on sale – will lose their current exemption from the expensive car ‘road tax’ supplement, adding £410 to their annual VED rate for the first five years, which is a £2,050 additional hit.
“January’s figures show EV demand is growing – but not fast enough to deliver on current ambitions,” says the SMMT chief executive Mike Hawes. “Affordability remains a major barrier to uptake, and the application 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.”
It’s not just EV market share bothering car makers though, as the total number of cars registered in January has also fallen back compared to last year. The SMMT blames weak economic confidence for a year-on-year slide in the new car market of -12.5 per cent.
Overall, it anticipates sales in 2025 will reach 1.95 million units this year, which is -0.2 per cent down on 2024, with EV sales reaching 23.7 per cent market share – some way short of the government’s 28 per cent ZEV Mandate.
We’ve recently reported that the government is in discussions with finance companies about the possibility of providing loan guarantees for EV buyers that could reduce the finance cost of the cars. However, John Cassidy, managing director of sales at Close Brothers Motor Finance also chose to highlight the forthcoming VED changes when responding to the latest figures.
“Cconsumer appetite for EVs needs to rise faster than its rate in 2024 if the Government wishes to realistically achieve its 2030 new internal combustion engine (ICE) ban,” he says. “Many would point to the upcoming imposition of vehicle excise duty for electric vehicle owners in April as an example of mixed signals from the Government.”
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