A distinct lack of electric vehicle support measures in the Spring Budget has sparked furore across the fleet, automotive and EV sectors.
Despite overt calls from prominent stakeholders such as the SMMT, BVRLA, FairCharge and many others, the Chancellor failed to address current “unfair” and “illogical” public charging rules whereby drivers using public charge points have to pay 20% VAT, compared to 5% for those able to access home chargers.
The Budget was also devoid of any measures to incentivise consumer purchases of electric vehicles – either new or used. While fleet demand for battery electric vehicles (BEVs) continues to rise, private buyers accounted for fewer than one in five (18.2%) new BEVs registered in 2024 so far and the SMMT had called for the Treasury to halve VAT on new EVs and change plans for electric cars and vans to pay Vehicle Excise Duty from 2025.
Mike Hawes, SMMT chief executive, said the Budget had been a missed opportunity to deliver fairer tax for a fair transition.
“Reducing VAT on new EVs, revising vehicle taxation to promote rather than punish going electric, and an end to the VAT ‘pavement penalty’ on public charging would have energised the market. With both Government and industry having statutory requirements to deliver net zero, more still needs to be done to help consumers make the switch.”
Vauxhall said the Budget had failed to “delivered the acceleration needed to stop the UK’s transition to electric vehicles from stalling”.
James Taylor, managing director, commented: “If we are to meet the rightly ambitious targets laid out in the Government’s ZEV mandate (80% of all [new] cars sold to be electric by 2030) then there needs to be incentives for private car buyers to make the switch to electric as there are in the majority of European nations.
“Vauxhall will already offer its entire car and van line-up as electric by the end of this year and has a number of highly competitive offers available but we cannot drive demand alone.
“Whilst there are strong incentives for company car drivers to make the switch to electric – including for those choosing luxury vehicles – the private buyer who wants a more attainable small or family car receives nothing.”
Taylor also called out the lack of fair taxation on charging and added: “We would call on the Chancellor to urgently set up purchase incentives to stimulate the electric vehicle market and review the unfair taxation on public charging so that the UK isn’t left behind in the race to more sustainable motoring.”
Fiat echoed Vauxhall’s comments. Damien Dally, managing director, commented: “The demand for electric vehicles is waning and we are sleepwalking into an electric vehicle crisis. The Government is also potentially putting its net zero target at risk.”
“Without any government financial incentive there’s no reason for the consumer to make the switch – which is why we launched the £3,000 Fiat E-Grant last June.”
Close Brothers Motor Finance also warned that the Spring Budget will do little to encourage the transition to electric vehicles for private drivers amid falling demand. Its research shows just 12% of motorists looking to purchase a car this year will go for an electric vehicle, down from 14% last year.
Lisa Watson, director of sales, commented: “Drivers would’ve been hoping for changes such as a cut to VAT on EV charging in order to improve affordability, as the upfront cost of purchasing an EV remains high. The absence of any impactful changes will also make the Government’s own ZEV mandate harder to achieve – and will cause headaches for car manufacturers in the process.”
James Court, chief executive of EVA England, said: “This year’s Spring Budget is a missed opportunity by the Government to support an EV sector that is on the cusp of mass uptake. Without targeted schemes to make EVs more affordable for the average consumer, all of our immense progress so far risks failing to hit the mark of our rightly ambitious net zero targets. Highly successful social leasing and targeted grant schemes are being implemented elsewhere, incentivising yet more drivers to make the switch, and this Government has failed to keep up with this momentum.”
Missed opportunities to support car and van fleets
Prominent fleet spokespeople warned of missed opportunities to support businesses with EV adoption – in particular van operators.
The Zero Emission Van Plan Coalition – fronted by the BVRLA and including Logistics UK, Recharge UK, the Association of Fleet Professionals (AFP) and The EV Café – has said the Budget overlooks the urgent needs of zero-emission vans. It had called for a range of measures to help “an LCV market that is limping towards its decarbonisation targets”.
A spokesperson for the Zero Emission Van Plan said: “Cost is a major barrier to adoption. The discrepancy between affordability of EVs vs diesel equivalents is prohibitive. The Zero Emission Van Plan is clear in how that gap can be closed. The Chancellor missed a golden opportunity to act. Increased fiscal support via extending the Plug-in Van Grant, or introducing new measures, are essential. We will continue to push for such changes until tangible progress is made.”
The Association of Fleet Professionals said more action is needed to support fleets. Paul Hollick, chair of the AFP, said policies from this government over the last 14 years had had a “marked and dramatic” impact on fleet electrification – but added: “The truth is that more assistance in this area is now required – especially when it comes to van electrification where there are fundamental issues to overcome as well the need for a further increased rollout of charging infrastructure – and there was no sign of that help arriving at any time soon. While minor moves such as the continued reduction of fuel duty is welcome, we very much hope to see more from whoever is in power following the next general election.”
Charlie Jardine, CEO of EO Charging, warned of the impact on the Government’s net zero strategy by not incentivising consumers and commercial fleets to switch to EVs.
Jardine said: “Stagnating sales of private EVs in the UK underscore the need for the Government to prioritise policies and investments to encourage mass market adoption of EVs, and the UK risks falling behind its global peers if it does not take measures to help drive uptake.
“Many governments worldwide have introduced policies and incentives to encourage EV adoption. As well as tax incentives, these include subsidies for purchasing electric buses, grants for building charging infrastructure and mandates for transitioning to zero-emission fleets.”
And while the Government reiterated that it is working with industry and Ofgem to implement electricity grid reforms announced at Autumn Statement 2023, others called for more action on charging.
Scott Haddow, chief executive officer at Nexus Vehicle Rental, said: “We believe that it is only when the Government starts prioritising infrastructure development that businesses will become more confident in their transition towards electric fleets. At that juncture, we can truly begin preparing for the petrol and diesel ban set for 2030.”
Meanwhile, Alphabet GB pointed out that Benefit-in-Kind tables for 2028/29 are yet to be published, leaving fleets in the dark as to future company car tax approaches.
Caroline Sandall-Mansergh, consultancy and channels development manager, said: “We eagerly await an update from the Government to ensure we can factor these into our planning as early as possible.”
Other Budget omissions included action on training to ensure vehicle technicians are ready for EVs.
James Lett, technical editor at Autodata, said: “A million EVs are already on the road, but they can only be serviced or repaired by technicians with specialist training and tools. Neither of these are cheap nor do we see any government investment to change that.
“Not only are garages are losing money by turning down business, EV drivers can’t access the services they need to safely be on the road. It’s a catch-22 situation that cannot continue.”
And the Vehicle Remarketing Association denounced the lack of action on used car incentives.
Philip Nothard, chair of the VRA, said: “What we really wanted to see from the Government was help to underpin the proper functioning of the used car market as it moves to electrification.
“There are clearly issues with levels of demand and residual values that need to be resolved as supply of EVs into the sector continues to rise quite rapidly. There are a range of possible solutions that have proven successful in other countries – from zero-interest loans to subsidies. Unfortunately, there was nothing forthcoming in this area and this was a Budget that was very much about the politics of the forthcoming general election.
“Polling for the Government is consistently bad, so it’s perhaps understandable that they would want to try and turn the dial in terms of popularity, but it’s also disappointing for a remarketing sector that really does feel it needs some form of assistance in the short to medium term.”
