Electric car sales sink again as industry calls for tax breaks

Household purchases of electric cars have gone further into reverse in the latest sign of trouble facing the market.

The Society of Motor Manufacturers and Traders (SMMT) on Thursday called for incentives to “re-energise” sales, as figures showed just one in five new electric vehicles (EVs) were bought by consumers in the first half of this year.

That compared to one quarter over the same period in 2023, underlining how the bulk of purchases continue to be made by so-called fleet buyers, such as rental companies.

Mike Hawes, the SMMT chief executive, said: “The private consumer market continues to shrink against a difficult economic backdrop, but with the right policies in place, the next government can re-energise the market and deliver a faster, fairer zero emission transition.”

Overall, EVs slightly increased their share of new car sales in the first half of this year, from 16.1pc to 16.6pc.

June was also the best month of 2024 for electric cars, which took a 19pc monthly market share compared to 17.9pc a year earlier.

But these figures remain below the Government’s annual target of 22pc, with sales heavily weighted towards business customers.

Out of about 167,000 EVs sold from January to June this year, only 19.8pc or about 33,000 were delivered to private buyers.

That was down from 24.2pc, or 37,000, over the same period in 2023.

Several experts say this is down to the fact that tax breaks remain in place for business buyers of EVs – including those that offer leasing deals through salary sacrifice schemes – while the UK’s consumer-facing plug-in grant was scrapped in 2022.

The SMMT, which represents carmakers, has called on the Government to revitalise private sales with cuts to the amount of VAT charged on EV purchases and the installation of public chargers.

This would generate an extra 300,000 sales of EVs to consumers, the lobby group estimates.

Jamie Hamilton, head of electric vehicles at Deloitte, warned that the switch to electric cars needed “ramping up”.

He added that a lack of charging infrastructure continued to be a barrier to many people buying EVs, adding: “The majority of people considering an electric vehicle want to charge their cars close to home.”

Richard Peberdy, UK head of automotive at KPMG, added: “Increasing new electric vehicle sales is imperative to UK car makers, who are now mandated to ensure that annually increasing percentages of the cars that they manufacture are electric.

“Incentivising businesses to make new EV purchases has been a key contributor to growing UK EV sales in recent years.”

The slowdown in private EV sales came despite a relatively strong car market overall, the SMMT said.

Half-year new car sales surpassed one million for the first time since 2019, the group said, reaching 1,006,763 registrations by the end of June.

So far, sales of petrol cars are up by 2.7pc, plug-in hybrids by 31.2pc and hybrids by 15.2pc, with only diesel car sales dropping by 12.1pc.