Government u-turn moves the ‘stick’ but fails to deliver the carrot to support transition to EVs

28 September 2023

Richard Bartlett-Rawlings, partner and automotive manufacturing specialist at RSM UK, comments: ‘As many manufacturers traditionally take summer shutdown in August for maintenance, it’s not surprising that UK car production saw a fall of 9.7% (45,052 units). Overall, the data continues double digit growth (11.8%) for the first eight months of the year and the August dip reflects seasonal norms which is unlikely to concern manufacturers this month. More pressing is the current regulatory head scratching taking place, after the government announced its plans to move back the transition to electric vehicles (EVs) to 2035.

‘Although government has faced some backlash over its decision and the uncertainty this creates around investment; it does give manufacturers more time to streamline production, bring down the price point to make EVs more accessible for all; and build demand. Current incentives, such as benefit in kind or salary sacrifice, favour high earners and fleet schemes and rule out a large percentage of consumers who don’t qualify. In addition, with the average cost of an EV car sitting at around £38k, many are just priced out of the market; so, can’t even consider a move to electric due to cost. 

‘This issue is compounded as manufacturers are starting to pair back lower-cost models such as the Fiesta as its not commercially viable to make smaller vehicles comply with new EU7 regulations on ICE emissions. If you take these popular, affordable models out of the market, it not only reduces competition, but we’ll continue to see cheaper electric models from China and Korea establish a greater market presence.

He added: ‘Pressure is certainly mounting, and there is the challenge of trying to enable all consumers to manage the transition to EVs. Until UK car manufacturers are in a position to produce EV vehicles at a competitive price – government needs to step in and rethink its current incentives for EVs to drive demand and provide greater certainty to boost investment.’