What does the Labour budget mean for the UK’s EV industry?

  • The UK’s Chancellor of the Exchequer, Rachel Reeves, has announced the UK’s Autumn budget.
  • Covering aspects such as EV BiK, and the current fuel duty, the budget has several implications for electric vehicles, and the wider emobility sector, in the country.
  • These are the EV-related highlights out of the first Labour party budget for 14 years.

What the new budget has in store for emobility

EV Incentives

In the budget, Reeves reiterated Labour’s position to support uptake of electric vehicles. This comes months after the party confirmed that the ban on the sale of new petrol and diesel cars would be brought forward to 2030, from a previous deadline of 2035.

Further supporting this earlier announcement, the budget has confirmed that existing incentives for EVs, such as Benefit in Kind (BiK), will be maintained from 2028. As was already the case, the BiK rate for EVs will see rises each year up to 2028, but these will still remain well below their ICE counterparts. This commitment will be welcome news for both businesses and individuals within EV salary sacrifice schemes.

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Additionally, from April 2025, the differential between fully-electric vehicles and other vehicle types, when it comes to the first rates of Vehicle Excise Duty (VED), will be increased. This means that whilst new EVs still won’t be eligible for free road tax from this date, VED should remain significantly lower than their ICE counterparts – making the purchase of a brand-new EV more attractive. This increased differential is also set to raise £400m for the economy by the end of the forecast period.

While the plug-in van grant will be extended for another year, there were no other mentions regarding changes on incentives for the electric van market, despite calls from the industry to increase uptake in this segment – where electric van market share is running at 5.1%, when it should be at 10% by the end of the year.

Fuel Duty

The budget also confirmed that taxes on petrol and diesel would remain level. The fuel duty will remain frozen next year, while the existing 5p duty cut will also remain. If this freeze was removed, and fuel duty rose in line with the Retail Prices Index, this would equate to a 7p rise in fuel per litre – which Reeves said would be ‘the wrong choice for working people’. The retention of this scheme is estimated to cost the economy $3 billion.

While the continuation of the EV incentives mentioned above will be welcomed by the industry, some will be disappointed with this maintained fuel duty freeze for a couple of reasons. Firstly, it exists at odds to Labour’s commitment to net zero, and it also means that for some, ICE vehicles may remain a more attractive proposition – particularly for those who are unable to charge an EV at home, at a price much lower than petrol or diesel.

Industry

A brief mention was also made of general increased funding for Research and Development in the UK. We’ll see if this translates to increased funding to emobility related organisations, such as the Advanced Propulsion Centre. Additionally, £2 billion in funding is being allocated to the UK’s automotive industry, which Reeves said will ‘support our electric vehicle industry, and develop our manufacturing bases’. Gigafactories were also brought up as another area set to see funding.

EO Charging CEO, Richard Staveley, reacted to the budget:

“This Government’s inaugural budget presented a crucial opportunity to advance sustainability targets. The bar must be set high, as the UK’s Net Zero Mandate ranks among the world’s most ambitious climate targets. This budget reveals a disappointing and concerning gap in the support needed to help businesses transition to electric vehicles.

Access to EVs and reliable infrastructure remains a major barrier to adoption. With net-zero targets fast approaching, more support is needed to accelerate the transition to EVs. Commercial fleets are a crucial, yet often overlooked, part of this effort. Transport is responsible for almost a quarter of global emissions, and commercial fleets account for a large proportion of this.

Transitioning to electric fleets requires significant investment and a comprehensive, business-wide transformation, making government funding essential to support the shift to EVs. Without direct support for electrification costs and the extension of initiatives like the Zero Emission Bus Regional Areas (ZEBRA) scheme—while avoiding cuts to other electrification programs—achieving Net Zero goals will be unattainable. Political leaders can, and must, commit to a robust funding strategy that transcends local politics, creating a stable environment for fleet operators to transition to EVs. Exploring alternative funding models—such as Scotland’s direct-to-operator approach, which streamlines processes and empowers fleets to allocate resources effectively—could be a viable solution. Additionally, there is much to learn from China’s EV mandate, despite its criticisms. Ultimately, the new government needs to develop and implement a strategy that addresses the challenges of EV adoption and commits to long-term funding to achieve the UK’s net-zero goals.”

Om Shankar, General Manager and Vice President of Konect, also shared his views:

“The government has previously stated its aim to accelerate the rollout of electric vehicle charging, but the budget falls woefully short in this area.

We need a 500% increase in public EV chargers between now and the end of the decade to meet our stated goals and projected EV demand.

Consultation is one thing, but sooner or later the government needs to show its hand. Some urgent action and lateral thinking on location of charge points and support for operators is needed.”

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