The government needs to incentivise motorists into buying electric vehicles, the Society of Motor Manufacturers and Traders (SMMT) declared today (March 13, 2025).
Modelling by the SMMT suggests that under current market conditions, 1.782 million new EVs will be registered between 2025 and 2027. Growth could be accelerated by halving VAT on new EV purchases, which would boost demand by a further 15 per cent and put 267,000 new EVs on the road. This would raise registrations to 2.05 million electric vehicles, all of which will require charging facilities, insurance, maintenance, and eventually supply the used car market.
SMMT said this would incur a temporary cost to the Treasury – an average of around £1,000 per car – but this could be offset by VAT receipts. The measure, combined with flexible regulation and mandated charge point rollout, would help drive a bigger and cleaner new car market, driving down CO2 emissions by six million tonnes a year.
Manufacturer investment has put over 1.3 million EVs on the road. This has been driven by widening choice, with over 130 EV models available with an average range of almost 300 miles on a single charge.
Despite this growth, SMMT said natural demand must still be lifted if the Zero Emission Vehicle (ZEV) Mandate targets are to be achieved. These targets were set under more optimistic market conditions and when energy and raw material costs were expected to fall. SMMT said they are now putting pressure on the sector with automotive manufacturers underwriting £4.5bn worth of discounting offered to UK buyers last year.
Customer sentiment
A new survey by SMMT, conducted by Censuswide, found that 23.1 per cent of would-be new car buyers surveyed plan to get into an electric car between now and 2028, which is below the government’s target of 28 per cent EV market share for 2025.
The survey also suggests that the EV market is highly reliant on drivers who have already bought electric, comprising almost half (48.7 per cent) of respondents. In total, 11.6 per cent of new buyers polled are intending to switch to an EV.
The market could, however, be transformed with government support, such as purchase incentives, greater charge point rollout, and a reduction in the cost of charging through a VAT cut. According to the survey, this would encourage around two in five consumers to drive electric.
In a statement, Mike Hawes, SMMT chief executive, said, “Manufacturer investment has meant ten times as many drivers are going electric compared with just five years ago. This is great progress but, with the right support for consumers, we can go beyond current expectations to put a total of more than two million new EVs on the road by 2028.
“Government investment to convert the ‘electric sceptics’ would energise business across the country far beyond just the automotive sector. Every stakeholder would benefit from the impact of consumer incentives which, when combined with binding targets for charge point rollout and more flexible regulation, would create a virtuous circle of rising demand that stimulates green economic growth.”
