UK reaches million EV milestone as new car market grows

Britain’s millionth battery electric car (BEV) reached the road in January 2024, while the new car market grew 8.2 per cent for the month, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).
The first month of the year saw 142,876 new cars registered, an uplift of 10,882 units on January 2023, the best performance for the month since 2020 and the 18th consecutive month of growth. The increase was driven entirely by the fleet market, which rose by 29.9 per cent, while private retail uptake fell -15.8 per cent. Fleets accounted for more than six in 10 (63.2 per cent) new cars registered, up from just over half (52.7 per cent) last year.
The market also – narrowly – reached its anticipated milestone of a million BEV registrations since records began. Some 20,935 BEVs were registered in January, a rise of 21.0 per cent year on year, taking the overall total since 2002 to 1,001,677 – testament to the commitment of manufacturers to deliver ever-increasing numbers of zero emission models. BEV market share for January also grew year on year to 14.7 per cent, although this is below the full 2023 performance of 16.5 per cent. Plug-in hybrids (PHEVs) recorded volume growth of 31.1 per cent to take 8.4 per cent of the market, while hybrid (HEV) volumes fell -1.2 per cent with a 13.1 per cent share.
Volatility in BEV supply has been expected and is likely to continue as manufacturers adjust product allocation following the last-minute resolution over UK-EU rules of origin, which had threatened to apply tariffs to EVs, restricting affordability. However, while fleet and business demand for BEVs grew by 41.7 per cent in January, registrations by private buyers fell by -25.1 per cent – an ongoing trend that will undermine Britain’s ability to deliver net zero.
The UK is now the only major market to combine a 2035 end of sale date with a mandated zero emission vehicle market share, but without any significant consumer incentives. Yet it is increasingly clear that private buyers need more support to switch. Ahead of next month’s Budget, industry is calling for government to support consumers by temporarily halving VAT on new BEV purchases. Such a step would cost the Treasury an average of just £1,125 per car, which is less than the cost of the previous Plug-in Car Grant and would put more than a quarter of a million electric – rather than petrol or diesel – cars on the road by the end of 2026, on top of those already expected. Not only would this cut CO2 by more than five million tonnes during that time, it would mean that the next million EVs could be delivered in just two years.
Temporarily reducing VAT on EVs would partly mirror the tax exemption already offered to consumers on other carbon reduction technologies such as heat pumps. Supporting the EV consumer today would also ensure wider benefits such as increasing the supply of used EVs, enlarging the overall market to make it more attractive for charging and manufacturing investment, and slashing Britain’s carbon footprint.
Mike Hawes, SMMT Chief Executive, said: “It’s taken just over 20 years to reach our million EV milestone – but with the right policies, we can double down on that success in just another two. Market growth is currently dependent on businesses and fleets. Government must therefore use the upcoming Budget to support private EV buyers, temporarily halving VAT to cut carbon, drive economic growth and help everyone make the switch. “Manufacturers have been asked to supply the vehicles, we now ask government to help consumers buy the vehicles on which net zero depends.”
The latest 2024 outlook for the new car market estimates a total overall volume of 1.974 million units, which is a 4,000 unit increase on the October estimate, but with the BEV forecast reduced to a market share of 21.0 per cent over the year, compared with the 22.3 per cent anticipated in October and the 23.3 per cent expected a year ago. While myriad factors such as high energy prices, inflation and interest rates, charging anxiety and mixed messaging from government have restricted demand, 100,000 more BEVs will still reach the road in 2024 compared with last year, totalling some 414,000 units – more than one in five new cars. This volume would increase even further if a VAT reduction on EVs was introduced.
NFDA welcomes “promising start” to 2024
Commenting on the figures, Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), which represents franchised car and commercial vehicle retailers in the UK, said: “January’s figures have built on the momentum of the previous year and mark an eighteenth month of consecutive growth for the UK automotive sector.”
Robinson added: “It is promising to see the year start off strongly with an increase in new car registrations in January, up by 8.2 per cent. It is also encouraging to see that sales of electric vehicles have bounced back after experiencing a decrease in November and December. These give us an insight into how electric sales have fared since the implementation of the ZEV mandate at the start of the year.
“Despite the positive start to the year, it is important that the Government continues to support the automotive industry during the transition to zero emissions by investing in charging infrastructure and provide for financial incentives for EV buyers. These issues have been highlighted to the Government in NFDA’s 2024 Spring Budget submission.
“In NFDA’s 2024 outlook survey the top three most prevalent reasons given by dealerships as to why customers are not considering purchasing an EV include range (82 per cent), anxiety around lack of chargers (82 per cent) and cost (80 per cent).
“2024 looks set to be an important year for the automotive industry, and we are confident that automotive retailers will continue to show their robustness through these challenging times.”
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