The UK automotive industry is urging the government to take decisive action to encourage more drivers to embrace electric vehicles (EVs). The Society of Motor Manufacturers and Traders (SMMT) believes that implementing purchase incentives could significantly accelerate EV adoption, putting an additional two million EVs on British roads by 2028.
The SMMT argues that such measures could stimulate the market by 15% beyond current forecasts. This would lead to substantial growth in various sectors, including chargepoint infrastructure, insurance, and maintenance, while also making a significant reduction in road transport emissions.
New modeling conducted by the SMMT indicates that, under current market conditions, approximately 1.782 million new EVs are expected to be registered between 2025 and 2027. However, the SMMT proposes that halving the VAT on new EV purchases could drive up demand by a further 15%. This would result in an additional 267,000 new EVs – rather than gasoline or diesel vehicles – being purchased, bringing the total EV registrations to 2.05 million. This growth would necessitate increased investments in charging, insurance, maintenance, and energy services, ultimately boosting the used car market.
While this policy would create a temporary financial burden on the Treasury—estimated at around £1,000 per vehicle—the government has already enjoyed a £2.5 billion VAT windfall over the past five years thanks to the tenfold increase in EV adoption. The SMMT contends. The measure, combined with flexible regulation and a mandatory chargepoint rollout, would drive a cleaner and larger new car market, reducing carbon dioxide emissions by 6 million tonnes annually. This reduction is equivalent to diminishing UK aviation emissions by a sixth and would also stimulate nationwide economic growth.
“Manufacturer investment has meant ten times as many drivers are going electric compared with just five years ago,” said Mike Hawes, SMMT Chief Executive,. “This is great progress but, with the right support for consumers, we can go beyond current expectations to put a total of more than two million new EVs on the road by 2028. Government investment to convert the ‘electric sceptics’ would energise business across the country far beyond just the automotive sector.”
Currently, the automotive industry has made significant investments, leading to over 1.3 million EVs already on UK roads. Consumers now have more than 130 EV models to choose from, with an average range of almost 300 miles on a single charge. However, despite this progress, the SMMT warns that additional incentives are needed if the government’s Zero Emission Vehicle (ZEV) Mandate targets are to be met. These targets, established during a more buoyant market and when energy costs were expected to remain low, are placing considerable pressure on the automotive sector. Manufacturers were forced to offer unsustainable discounting and underwrite the transition, estimated to be around £4.5 billion last year alone.
A recent survey conducted by Censuswide for the SMMT revealed that 23.1% of potential new car buyers intend to transition to EVs between now and 2028. This is a promising figure, but it falls short of the government’s target, which calls for an EV market share of 28% this year. Furthermore, almost half (48.7%) of the current EV market comprises drivers who have already switched to electric vehicles. This means that fewer than one in eight (11.5%) new car buyers are actively planning to purchase an EV.
The SMMT believes that there is an opportunity to transform the market through government support. Purchase incentives, expanded chargepoint infrastructure, and reductions in charging costs via a VAT cut would encourage two in five ‘electric sceptics’ to transition to EVs. This would generate significant carbon savings and strengthen the new car market which is a business driver in all markets.
The newly published SMMT report, In It Together: Why every sector wins with EV volume, explores how a larger EV market volume benefits various sectors beyond automotive, and how those sectors can play a vital role in boosting EV adoption—creating a circular trend of economic growth, cleaner mobility, and social change.
Greater EV volumes would support the transition across all road transport. Improved infrastructure rollouts, reasonable insurance premiums, and accessible EV maintenance would also accelerate the van market’s transition, a sector governed by the ZEV Mandate. Expanding the EV fleet would also encourage investment in grid connections and support depot charging, which is crucial for de-risking investments in zero-emission Heavy Goods Vehicles (HGVs). This is a crucial development given that most new trucks will need to be zero-emission by 2035. Given this short timeframe for most fleets—and the fact that ZEV HGV market share is currently 50 times lower than in the new car market— the need for swift action from policy markers is evident.
