UK Surpasses One Million Electric Cars Sold Since 2002, Calls for Tax Cuts Amidst Sales Dip

Despite a significant drop in new electric vehicle (EV) registrations, the UK celebrated the milestone of reaching one million electric cars on its roads last month, according to recent figures. New registrations of EVs by private buyers saw a 25% decline in January, posing a challenge to the country’s net-zero commitments. The Society of Motor Manufacturers and Traders (SMMT) reported an overall 16% decrease in new car sales to private customers during the same period.

While new EV registrations faced a decline, the electric car market saw a surge in fleet purchases, particularly by companies acquiring over 25 units at once. Battery electric vehicles (BEVs) experienced a growth of more than 40% in demand from fleet buyers, contributing to over 20,000 BEVs registered in January. Notably, this milestone signifies that the UK has seen one million electric cars on its roads since 2002.

Electric cars captured a 14.7% market share of all new vehicles sold in the UK in January, marking a slight increase from the same month in the previous year. However, this figure still falls short of the 16.5% market share achieved for the entire year of 2023.

Amid the decline in private buyer interest, the SMMT is urging the government to consider halving the Value Added Tax (VAT) on electric vehicles to stimulate demand. SMMT’s Chief Executive, Mike Hawes, emphasized the need for government support to accelerate the adoption of electric vehicles, crucial for achieving net-zero goals.

EVs offer lower running costs compared to traditional petrol and diesel vehicles, but the initial upfront price remains a deterrent, being 30-40% higher, as stated by the motoring organization. While businesses and company car users continue to benefit from tax incentives, individual grants for EV buyers were phased out in 2022.

In 2023, Prime Minister Rishi Sunak announced a five-year extension to the ban on new petrol and diesel car sales, moving the deadline from 2030 to 2035. Despite this delay, car manufacturers are compelled to meet strict quotas for selling electric cars starting from January, facing fines if they fall short. The quota will progressively increase each year until 2030.

Despite the dip in private registrations, the overall new car market in January exhibited growth, primarily driven by a significant increase in fleet sales, which witnessed a 33% rise. Fleet sales now contribute to over 60% of new cars registered, up from just over half in the previous year.