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Lisa O’Carroll

The UK will not meet targets for electric vehicle sales unless the government creates more incentives for consumer to buy including reform of VAT and energy prices, the car industry has warned.

Mike Hawes, chief executive of Society of Motor Manufacturers and Traders, says the automotive industry is paying six times as much tax on energy in British factories as their equivalent in the EU pay.

And despite a years-long campaign to slash prices consumers pay to charge their cars, there is still inequality on the road with those lucky enough to have their own drive paying 5% VAT while those in big urban areas are penalised by paying 20% VAT on electricity from chargers on the public road.

Sam Lister, director general for industrial strategy at the department of business and trade, told the SMMT annual conference this morning that the UK had some of the highest energy prices in the world.

“I think fundamentally, we were at our bottom of the European league table, the global leage table, at £160 per megawatt hour … cabinet definitely backed getting it to £120, so it is significant and gets it to the middle [of the table] in terms of Europe … but [compared with] Texas where it is something like £50 .. there are still some really competitive challenges,” he said.

Hawes also renewed calls for changes in the UK’s Zero Emissions Vehicle (ZEV) rules which sets the percentage of new car and van sales that must be zero emission, saying the current set-up is not working.

Under the government’s ZEV rules 28% of new cars sold this year must by EVs, rising to 80% in 2030 and 100% in 2035.

Hawes said:

“I think if you decide to set a regulation which effectively is seeking to control the market, and the market doesn’t respond, you’ve got to look at the fundamentals behind the market…. which is showing that the underlying level of demand for EVs is below the regulation last year, at 19.6% against 22%. This year we’re running at about 21%, but against [the target of] 28%, so there is a gap.”