EV’s should be sold VAT-free according to the SMMT as the automotive industry records a fall in demand for new cars of almost 3% last month.

Nearly 80,000 new cars were registered in February compared with almost 82,000 during the same month last year, according to reports from the Society of Motor Manufacturers & Traders.

The fall in sales has been attributed to weak consumer confidence and confusion over fuel technology and the options available. The trade association called for the Chancellor to remove tax from all new electric vehicles, including plug-in hybrid and hydrogen fuel cell EV’s. The SMMT claims that removing VAT from EV’s would boost sales to nearly a million units over five years and result in an extra CO2 saving of 1.2 million tonnes.

This year, a variety of manufacturers will bring 20+ battery-powered and 10 plug-in hybrid electric vehicles to the UK adding to the 65+ already on sale. Take-up of the EV market is slow however, with factors such as affordability and the supply of charging infrastructure nationally having an impact on sales. The removal of VAT from EV’s combined with the long-term continuation of the plug-in car grant and its reintroduction for plug-in hybrids; as well as exemption from VED and insurance premium tax, could result in the cost of these vehicles being cut by as much as £10,000.

‘Industry has invested in the technology, with a huge influx of new zero- and ultra-low-emission models coming to market in 2020, and we now need the government to match this with a comprehensive package of incentives and infrastructure spending to accelerate demand’ – SMMT chief executive Mike Hawes