Sales of electric vehicles reach a record high in 2023 but manufacturers are calling on government to halve EV VAT, to put more than a quarter of a million extra zero emission vehicles on the road and cut five million tonnes of CO2 by end of 2026.
2023 saw the UK new car market has record its best year since the pandemic as a strong December, up 9.8%, wrapped up the 17th month of consecutive growth.
1.903 million new cars reached the road during 2023 – an increase of 17.9%, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).
Growth was driven entirely by fleet investment as the previous year’s supply constraints faded and helped fulfil pent-up demand. Fleet deliveries rebounded by 38.7% year on year, while business registrations, a small proportion of the market, fell by -1.5%. Private consumer demand remained stable at 817,673 units after a strong recovery in 2022, with cost of living pressures and high interest rates constraining growth.
As the industry transitions away from fossil fuels, drivers continued to invest heavily in low and zero emission vehicles – which meant average new car CO2 fell by -2.2% to 108.9 g/km. Hybrid electric vehicles (HEVs) recorded robust growth, up 27.1% to reach a 12.6% market share. Plug-in hybrids (PHEVs) also enjoyed a strong year, with a 39.3% increase in registrations to account for 7.4% of the market.
Since the end of the Plug-in Car Grant in June 2022, the UK is the only major European market with no consumer BEV purchase incentives – but it is now also the only market with mandated minimum targets for new ZEV registrations.
With mainstream consumer demand flat, the industry is calling on government to support private buyers by halving VAT on new BEVs for three years. This temporary cut would give private consumers access to fiscal support at a level similar to that enjoyed by business buyers, enabling manufacturers to deliver larger volumes of zero emission vehicles. Combined with a retention of the business incentives that have already proven their value in increased EV uptake, the measure would accelerate the UK’s market transition. More drivers would upgrade their existing petrol or diesel car to a new zero emission alternative, widening the future supply of used electric vehicles and making investment in chargepoint rollout even more compelling.
Mike Hawes, SMMT Chief Executive, said,
With vehicle supply challenges fading, the new car market is building back with the best year since the pandemic. Energised by fleet investment, particularly in the latest EVs, the challenge for 2024 is to deliver a green recovery. Government has challenged the UK automotive sector with the world’s boldest transition timeline and is investing to ensure we are a major maker of electric vehicles. It must now help all drivers buy into this future, with consumer incentives that will make the UK the leading European market for ZEVs.10
