The boss of the UK’s most popular car maker has called for incentives for private buyers of electric cars to help stimulate demand.
Alex Smith, MD of Volkswagen Group UK, said that incentives were “eminently sensible” to help “signal that this is the direction of travel” towards EVs as the UK car market readies to be solely electric from 2035.
His comments follow a House of Lords report that criticised the UK government for “prematurely” ending previous incentives that were in place in the market to subsidise the sale of EVs. The Plug-in Car Grant was suddenly axed in 2022.
“There are things that could be undertaken in the retail market to further accelerate demand,” Smith told Autocar in an exclusive interview on the day of the report’s publication.
“We would be absolutely in favour of well-targeted, specific and realistic incentives to signal that decarbonisation of road transportation is the aim and that battery-electric vehicles are a very, very significant tool in achieving that.
“Therefore having incentives in place is eminently sensible in the private market, because you’re sending that signal that this is the direction of travel.
“You do need signalling behaviour in order to ensure that there isn’t consumer confusion.”
Smith listed a 10% VAT rate on the sale of new EVs as one potential option, mirroring something seen in other sectors, along with a cut again in VED (road tax) for EVs.
Longer-term security around benefit-in-kind tax rates for EVs would also help ensure the strong demand from fleet buyers remained for EVs too, he said.
Binding targets for the roll-out of infrastructure to support EVs should also be introduced, according to Smith.
He believes this to be only fair, as car manufacturers now have a legislated target to hit for the sale of EVs themselves – 22% this year – as part of the government’s new ZEV mandate.