According to the latest figures from the Society of Motor Manufacturers and Traders (SMMT), the UK’s new car market grew 14.7% in January to reach 131,994 units. This was the best start to the year since January 2020’s pre-Covid 149,279 units and marks the sixth successive month of expansion.
Electrified vehicles notably drove the increase, as manufacturers continue to bring ever more choice to the market despite ongoing strains on the supply chains. Battery electric vehicle (BEV) registrations rose 19.8% to reach 17,294 units, accounting for 13.1% of all new registrations.
Hybrid electric vehicles (HEVs) accounted for 14.4% of new car registrations, increasing volumes by 40.6%. Plug-in hybrid electric vehicles (PHEVs) recorded a 0.7% rise, although their share fell to 6.9% of new cars reaching the road. As a result, one in five new cars registered in the month came with a plug.
Plug-in vehicles are anticipated to comprise of more than one in four new registrations this year, representing a growth of 32.1% or approximately 487,140 units, and almost a third (31.0%) of the market in 2024 at 607,150 units.
The rollout of infrastructure needed to charge them, however, is failing to keep pace. During the fourth quarter of 2022, the ratio of new chargepoint installations to new plug-in car registrations dropped to one for every 62. This is a significant fall compared with the same quarter last year when the ratio was 1:42. As a result, in 2022, one standard public charger was installed for every 53 new plug-in cars registered. This is the weakest ratio since 2020.
Mandating rollout targets for infrastructure and regulating service standards would give drivers certainty they can always find a working, available charger. Infrastructure must be built ahead of demand else poor provision risks delaying the electric transition.
More immediately, the upcoming Budget is an opportunity to implement measures that support the transition. Reducing VAT on public chargepoint use from 20% to 5% in line with home charging would ensure more affordable access for all and underpin a fair net zero transition.
Government should also review proposals to graft a Vehicle Excise Duty regime designed for fossil fuel cars onto zero emission vehicles (ZEVs). The higher production costs associated with electric vehicles means that currently more than half of all available BEVs would be subject to the expensive car supplement due to apply to ZEVs from 2025.
While it is right that all drivers pay their fair share, existing plans would unfairly penalise those making the switch, and risk disincentivising the market at a time when electric vehicle (EV) uptake should be encouraged. Government should also tackle other fiscal blocks to uptake by raising recommended business mileage rates.
Mike Hawes, SMMT Chief Executive, said, “The automotive industry is already delivering growth that bucks the national trend and is poised, with the right framework, to accelerate the decarbonisation of the UK economy.
“The industry and market are in transition, but fragile due to a challenging economic outlook, rising living costs and consumer anxiety over new technology. We look to a Budget that will reaffirm the commitment to net zero and provide measures that drive green growth for the sector and the nation.”