Electric cars: Government urged to ‘go on the offensive’

Society of Motor Manufacturers and Traders (SMMT) chief executive Mike Hawes dismissed recent concerns about the amount of taxpayers’ money being spent on securing investment in UK factories to build electric vehicles (EVs).

Last week BMW has announced a £600 million investment to prepare its Mini factory in Oxford to build new electric cars after securing Government funding reported to be worth £75 million.

This came just days after EV production began at the Stellantis factory in Ellesmere Port, which was also backed by taxpayers’ money.

At the SMMT’s Electrified 2023 conference in Westminster, Mr Hawes said Government support is “crucial” for manufacturers.

He told reporters: “Certain commentators have described this as shoring up the UK industry.

“But I think we can say it’s more than that. Defence is the best form of attack, and we need to go on the offensive.

“This transition depends on that investment and more investment.

“Investment not just in manufacturing but also in the market.”

SMMT figures show the market share for battery electric new cars in the UK has soared from 0.7% in 2018 to an anticipated 17.8% by the end of this year.

But in recent months the surge in demand has been driven by purchases for fleets rather than by private buyers.

The private share of battery electric new cars has fallen from more than a third (36.2%) in the first half of 2022 to less than a quarter (24.2%) during the same period this year.

The SMMT said the UK is the only major European car market with no incentives for consumer purchases of EVs but has “the most ambitious timeline”.

Sales of new conventionally fuelled cars and vans will be banned in the UK from 2030, with hybrids outlawed five years later.

Mr Hawes said: “Within the market we’re moving from perhaps the early adopter phase, we need to now make it mainstream.

“I was never worried about the first 20%. I’m worried more about the last 20% of that market shift.

“To create that mass market you must help consumers make the transition more quickly.”

Mr Hawes went on: “We believe every option needs to be considered to help that private consumer make the transition.”

He called for “targeted support” such as reducing VAT on public charging and the purchase of EVs, exempting EVs from the expensive car supplement in vehicle excise duty, and a “national mandated” plan to improve the charging network.

He went on: “It’s not just a commercial imperative.

“It’s a matter of social justice to have a fair transition across the country.

“We’re on the road to electric vehicles as an industry and as a society so it makes no sense to delay.”

A survey commissioned by the SMMT indicated that more than two-thirds (68%) of non-EV drivers want to make the switch to electric, but just 2% plan to do so this year, with 17% expecting to invest in 2024.

The poll of 2,375 UK adults was conducted by Savanta earlier this month.

Alex Smith, managing director of Volkswagen Group UK, said the “progressive withdrawal of incentives” has caused “stagnation” in demand for EVs from private buyers.

He warned that EVs are “regarded by the private consumer as relatively expensive”.

He said: “It’s true to say that with the retail price of an electric car versus an equivalent petrol or diesel car, you will find a premium.

“The technology is new, the volumes and the economies of scale so far are not fully realised, so there’s a premium.

“But when you look at the operating costs, when you look at the fuelling costs of petrol usage versus electricity usage, especially if the majority of charging is done at home, then the argument (for EVs) becomes far more compelling.

“I think incentivisation in the private market still has a role to play in terms of signalling the direction of travel.

“We also need to continue to make sure that our explanations to consumers are crystal clear in terms of the affordability over the whole ownership cycle, rather than just at the point of initial purchase.”