Sales of Electric Cars to Private Owners Drop Amid Lack of Financial Subsidies

A line of electric vehicles of the model Y during the start of the production at Tesla's "Gigafactory" in Gruenheide, southeast of Berlin on March 22, 2022. Patrick Pleul/Pool/AFP via Getty Images

Sales of electric cars to private drivers have plunged amid the cutting of financial incentives and the overall uncertainty over maintaining electric vehicles (EVs).

Private owners were less eager to buy electric cars in the first half of 2023 than the same time last year.

Figures released by the Society of Motor Manufacturers and Traders (SMMT) showed that 24.2 percent of all EVs were registered to private retail-buying motorists this year. This compares poorly to last year’s 36.3 percent.

Drivers are less motivated to enter the EV market because they cannot afford it, the trade association suggested. Britons were left with “no consumer EV incentives” after the government scrapped the Plug-in Car Grant in June 2022.

Under the scheme, private owners could get up to £1,500 off an EV, but the government ended the programme to focus on “improving electric vehicle charging.” Sales to private buyers have then fallen from more than one in three, to less than one in four.

Drivers can not keep up with Britain’s “ambitious EV transition timeline,” said the SMMT report.

Under current Government plans, the sale of new cars powered solely by petrol and diesel will be banned from 2030 across the UK. The final stage of the plan aims to see all new cars and vans be fully zero emission from 2035.

Adding to that is the pressure on motorists to adhere to the new ultra-low emission zone (ULEZ) standards. With the expansion of ULEZ to cover all of London, car owners, whose vehicles don’t meet the standards, can either choose to upgrade to a new car or pay a £12.50 daily charge to drive within the zone.

SMMT chief executive Mike Hawes said that comprehensive measures would encourage UK households to go electric. This would boost the industry that is recovering from the pandemic and benefit all stakeholders, he added.

Earlier this year, Stellantis, which owns Vauxhall, warned that the middle classes cannot afford the cost of electric cars without the support of state subsidies. The demand for EVs among private owners doesn’t match the supply because motorists are faced with the cost-of-living crisis, historically high inflation and high energy costs.

SMMT said that 68 percent of consumers, surveyed in September, said that financial incentives were a significant factor in switching to an electric car.

Range Anxiety

Another concern for private owners is charging costs and the availability of charging points across the country.

The SMMT reported that 67 percent of consumers, surveyed in September, said they would buy an EV sooner if they had access to affordable and reliable public charging. Mandating targets for chargepoint rollout would help overcome these issues, the SMMT suggested.

To eradicate “range anxiety” for drivers, as the number of EV sales grows, the government has confirmed a £1.6 billion investment to building the UK’s public chargepoint network.

There are currently more than 40,000 public EV chargepoints in the UK, serving approximately 2 percent of vehicles on the road. Charging devices are distributed unevenly in terms of their geographical location. London and Scotland have the highest level of charging provision per capita.

Paucity of chargepoints remains the biggest barrier to buying an electric vehicle, according to Mr. Hawes.

Businesses and Fleet Markets

As it stands, businesses and fleet markets are ahead of private owners in their switch to EV vehicles. Fleets are leading the electric transition, with the UK emerging from “early adopter” phase and aiming to reach mainstream use.

After ending the plug-in car grant scheme, the government refocused its £300 million funding to boost sales of vans and trucks, taxis, motorcycles and wheelchair-accessible vehicles. These types of vehicles are mostly used by businesses, as opposed to private owners, making it more financially affordable for companies to switch to EVs.

An example of a financial relief for business-owned EVs is lower taxation. For 2023-2024 and 2024-2025 financial years, the taxable benefit on electric cars is set at 2 percent. After this it will increase 1 percent per year, reaching 5 percent by 2027-2028.

The SMMT suggested that the success of the business and fleet markets in switching must now be “replicated in the private retail market.”