Demand for fully electric vehicles continued to rise in June as the auto industry called for a VAT cut on public EV charging.

The SMMT said cutting VAT on public EV charging will help make owning an EV fairer and more attractive

Latest figures from the Society of Motor Manufacturers and Traders (SMMT) show an overall 25.8% rise in new car registrations last month, reaching a total of 177,266 vehicles.

Demand for battery electric vehicles (BEVs) saw further strong growth, up 39.4% to 31,700 units and taking a 17.9% of the total market – compared to 16.1% for June 2022. Hybrids (HEVs) and plug-in hybrids (PHEVs) saw even higher rises, up by 40.1% and 65.5% to 20,991 and 12,770 units respectively.

But petrol remained the most popular powertrain with deliveries increasing 22.7% while diesel registrations were down 13.5%, both including the figures for mild hybrids.

The SMMT also reveals continued strong demand for new cars from large fleets, with registrations up 37.9% to 92,699 units on the back of pent-up demand from constrained supplies for the last couple of years. The figures for smaller business fleets – companies with fewer than 25 vehicles – also show robust demand and were up 12.7% year-on-year, reaching 4,769 units. Taken as a whole, fleet registrations rose 36.4% – far outstripping the more modest 14.8% growth in private registrations, which rose to 79,798 units.

For the first half of the year, the overall new car market is up 18.4%, with larger fleets rising 38.4%, smaller ‘Business’ fleets up 21.1% and private buyers rising just 1.7%, amid rising interest rates and mortgage payments. BEV uptake for H1 reached record levels with 152,968 deliveries so far this year – some 13 times greater than the same period in 2019 and with a 16.1% market share compared to 14.4% for the first half of 2022.

But with a zero-emission vehicle mandate requiring 22% BEV registrations per manufacturer due to come into force in less than six months’ time, the SMMT says more needs to be done to accelerate the transition, in particular for private buyers.

It’s joined the call for a cut in VAT on public charging to help quicken EV uptake. Drivers able to charge at home pay just 5% VAT to power up their EV, compared with 20% for those without access to a driveway or designated private parking space who are reliant on the public network.

VAT equity would make switching to an electric vehicle feasible for more people regardless of home ownership or property status.

Mike Hawes, SMMT chief executive, said: “The new car market is growing back and growing green, as the attractions of electric cars become apparent to more drivers. But meeting our climate goals means we have to move even faster. Most electric vehicle owners enjoy the convenience and cost saving of charging at home but those that do not have a driveway or designated parking space must pay four times as much in tax for the same amount of energy. This is unfair and risks delaying greater uptake, so cutting VAT on public EV charging will help make owning an EV fairer and attractive to even more people.”

More work needed to ensure fit-for-purpose charging network

British Gas, which is working to completely electrify its fleet by 2025, said the EV growth was encouraging but served as a reminder of how much work remains to be done in terms of ensuring our charging infrastructure is fit for purpose.

Gavin Murray, Hive and EV director, comnmented: “If the UK is to keep pace with the electrification curve, we need to see greater collaboration across key stakeholders so that no one is excluded from EV ownership. Government and local policy makers must focus on creating a fit for purpose framework that supports the role out of accessible and user-friendly fast charging stations to ensure an easy switch for consumers to EVs.”

Novuna Vehicle Solutions, meanwhile, said sustained uptake of electric vehicles required a long-term strategy for building advanced automotive manufacturing supply chains in the UK.

Managing director Jon Lawes elaborated: “At the heart of the problem is the requirement to deliver domestic lithium battery manufacturing at scale which is critical if we are to drive down the cost of EVs for private buyers and achieve zero emission mobility.

“Without a resilient, self-sufficient UK-based battery manufacturing capacity, our ability to make and export EVs and be at the forefront of the net-zero revolution hangs in the balance.”

Finally, KPMG noted that rising interest and mortgage rates could impact private buyer demand going forwards – and also highlighted the changing face of the car market.

Richard Peberdy, UK head of automotive, said: “With new entrants from China and a continued growth of Korean brands, more competition is emerging in the UK car market at a range of price points. This will alter brand market share over the coming years, especially for electric vehicles, disrupting the dominance of legacy players.”