The UK automotive industry has urged the Government to rethink “fiscal policies that threaten the UK’s new car market”, ahead of today’s Autumn Budget speech in the Commons.

The Society of Motor Manufacturers and Traders (SMMT) said it welcomed government support for EVs so far but warned that the benefits would be “wiped out by damage” from any announcement on EV road pricing, along with the end of Employee Car Ownership Schemes (ECOS).

Chancellor Rachel Reeves is expected to announce a £1.5bn funding boost for EVs in the Budget, including an extra £1.3bn for the Electric Car Grant scheme and an additional £200m to accelerate the rollout of charge points across the UK.

But widespread reports have also trailed an announcement on a new EV road pricing system to help counter plummeting fuel duty revenues as drivers switch to electric vehicles.

According to an initial report in The Telegraph, EV drivers could be charged 3p per mile, on top of other road taxes.

The SMMT has said that EV road pricing – along with government plans to make ECOS liable for company car tax from April 2026 – would undermine electric car support and other recent government commitments, notably the Industrial Strategy and the £2.5bn fund designed to boost innovation, productivity and inward investment.

The industry body said “singling out” electric cars for a new pay-per-mile tax would suppress demand, “discouraging consumers and making ever-tougher sales targets even more costly and challenging to achieve”.

It warned that “no mitigation measures”, even the additional Electric Car Grant funding, “could offset the message this measure would send consumers”.

A spokesperson added: “Given the industry has already had to spend £8.5bn on EV discounts in pursuit of targets, measures that further weaken demand will only shrink the market and deter investors.”

The SMMT also warned that plans to end Employee Car Ownership Schemes will cost the industry – and the Government – a combined £1.5bn per year, with 5,000 manufacturing jobs at risk.

Speaking at the SMMT’s annual dinner in London on Tuesday evening, Mike Hawes, SMMT chief executive, said: “Government has said it will back automotive to the hilt and, for the most part, deeds have matched words with trade agreements, regulatory flexibilities and an Industrial Strategy supplemented by a £2.5bn fund that is designed to support automotive as a growth sector.

“But with the good also came the bad and the downright ugly, with the proposed ending of Employee Car Ownership Schemes. The Budget this week is a chance to align fiscal measures to growth and the future success of the sector. 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.”

Mick Flanagan, SMMT president, commented: “Every vehicle maker and supplier has invested heavily to create a pipeline full of EV programmes, however, the demand is still not there, the charging infrastructure is not there – and yet the ZEV mandate still demands we sell these vehicles. We are at a tipping point in our electrification journey – what we choose to do now will shape our future radically.”