The Budget delivered by Chancellor Rachel Reeves (pictured) today received a mixed response from dealers saying it gave limited backing to EVs.
Reeves announced that from April 2028, EV drivers will pay a road charge of 3p per mile, while plug-in hybrid drivers will pay 1.5p per mile, with the rates going up each year with inflation.
Sue Robinson, chief executive of the National Franchised Dealers Association (NFDA), said: “The announcement made today by the Chancellor provide some optimism, for instance freezing fuel duty, but it also underlines that in many areas the Government continues to fall short in delivering meaningful support for the automotive industry such as the pay per mile tax.
“The lack of a clear plan to manage the fiscal impact of declining fuel and VED revenues is concerning. Without targeted measures to support dealers, these changes risk slowing investment and placing additional strain on the sector during the transition to electric”
The Government has committed an additional £1.3 billion to the Electric Car Grant. It is maintaining a freeze on fuel duty at 5ppl. And the Employee Car Ownership Scheme (ECOS) removal has been delayed to April 2030.
Reeves also announced that VAT exemptions have been cut on vehicles bought by the Motability scheme. Luxury brands such as BMW, Mercedes, Audi, Alfa Romeo and Lexus will be removed from the scheme.
The Government has also increased the Expensive Car Supplement from £40,000 to £50,000.
Robinson said: “An increase to the Expensive Car Supplement (ECS) for battery electric vehicles, from £40,000 to £50,000 from 1 April 2026, is welcomed. NFDA has previously called for the increase as the former threshold of the ECS was a disincentive to consumers looking to shift to EVs.”