The SMMT has come out strongly against the chancellor’s leaked proposals for electric vehicles in this week’s budget, saying that the measures risked undoing the government’s support for electric vehicles and would inflict “severe damage” on the auto industry in the UK.
The Society of Motor Manufacturers and Traders hosted its annual dinner in London on the eve of the budget, and the industry body welcomed the support that the government had given to the car industry so far, but it also had some strong words of warning ahead of the gathering that included car industry leaders and politicians.
It said that “singling out electric cars” for a pay per mile tax scheme would “suppress demand” and discourage consumers, and that no mitigation measures including additional plug-in grant funding “could offset the message this would send consumers”.
The SMMT’s CEO said that the government should instead be using the budget to focus on stimulating demand for EVs. “The budget this week is a chance to align fiscal measures to growth and the future success of the sector,” said SMMT Mike Hawes. “Rather than road pricing for EVs, we need to see measures that stimulate consumer demand, so we can deliver the tax revenues, jobs, investment, productivity and growth that is in everyone’s interests.”
Ford UK boss Lisa Brankin spoke out last week on the proposals, saying that her company had already seen customers cancelling their orders in the face of uncertainty about EV running costs.
Electrifying.com founder Ginny Buckley also had strong words to say about the mixed messages on electric vehicles being sent by the government ahead of the budget. “They have to get their story straight: you can’t encourage people to buy EVs with grants while simultaneously floating pay per mile charging,” she said. “For drivers, that feels like being green-lit into the EV transition and then immediately met with a stop sign.”
Speculation ahead of the budget indicated that the government was considering a proposal to introduce a pay per mile tax scheme for electric cars in order to balance out the lost income from fuel duty as drivers switch from combustion engined vehicles.
The rumours were confirmed by the Treasury, which said that the chancellor would be announcing a consultation with a view to introducing the new system in 2028. The government later revealed that it would be committing a further £1.3bn to the plug-in grant kitty and extending the scheme by another year to 2030.
Chancellor Rachel Reeves has teased some big changes to EV taxation ahead of this year's budget 
