CEO Update

Cutting plug-in car grant risks stalling market

17 December 2021 #CEO Update

It was incredibly disappointing for government to slash grants for electric cars and vans this week, the second cut this year. It is a blow to customers looking to make the switch and couldn’t come at a worse time, with inflation at a ten-year high and pandemic-related economic uncertainty looming large.

It means that the UK’s incentives are now the least generous of all the European countries that offer electric vehicle purchase incentives. This is despite the UK having amongst the most ambitious of targets for EV adoption, with the aim that they should account for around one in three cars on the road by 2030, a massive rise from the one in a hundred we have currently.

Industry and government ambition for decarbonised road transport is high, and manufacturers are delivering ever more products with ever better performance. But we need to move the market even faster, which means we should be doubling down on incentives.

Other global markets are already doing so whereas we are cutting, expecting the industry to subsidise the transition, and putting up prices for customers. UK drivers risk being left behind on the transition to zero-emission motoring.

Elsewhere this week, more positive news with the UK announcing its first full new post-Brexit trade deal, with tariff free access to Australia. The country is a growth market for the UK sector, currently the sixth largest export market for British cars.

Indeed, in 2020, exports of finished British vehicles, engines and parts to Australia was worth almost half a billion pounds. The deal offers tariff free access to the market but also creates an opportunity to diversify supply chains to build the batteries essential for our transition to zero-emission motoring.

Nevertheless, Britain’s automotive manufacturers will still face significant trade barriers, not least the distance between our respective markets and Australia’s tax policies. These are more punitive towards foreign-made premium cars, a segment in which the UK – with its array of famous brands – is one of the world leaders.

Moreover, markets closer to home, in particular the EU, take by far the majority of British car exports and with full customs controls being introduced on 1 January 2022 it’s crucial that there are no problems with their implementation. The sector has been working extremely hard to prepare for the change, but any additional border delays in the New Year would represent yet another challenge for the sector.

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