Consumer incentives are likely to be considered in the Government’s fast track consultation into the electric vehicle market in a bid to boost flagging zero emissions car sales.
Ministers will publish a new consultation into the EV industry by the end of the year after car manufacturers warned that current rules risked crippling the domestic sector.
Major car makers, such as Ford, have urged the Government to consider bringing back incentives, such as tax breaks or grants, to attract drivers to buy EVs as anger has grown over existing sales targets.
Government sources refused to rule out the prospect of fresh incentives for drivers, but said any decision will come down to the Treasury.
Speaking to broadcasters on Wednesday, Chancellor Rachel Reeves insisted the Government will ensure “proper support” for the car industry as it phases out sales of new petrol and diesel vehicles.
“We are committed to the 2030 target for phasing out the purchase of new petrol and diesel cars, but it is really important within that to make sure that we get the balance right and have proper support for the automotive sector, for the car industry in Britain,” she told broadcasters.
When pressed by i as to whether such incentives will be considered as part of the consultation, Downing Street also refused to rule it out, with the Prime Minister’s official spokesman stating: “I am not going to get ahead of the consultation”.
He added: “We understand the challenges that the industry is facing, and I would point you to the announcements in the Budget – that includes £200m next year to accelerate the electric vehicle charge point rollout across England, which is obviously a key factor for consumer demand.”
This year manufacturers have to ensure 22 per cent of car sales and 10 per cent of van sales are electric or risk incurring a £15,000 penalty for each vehicle outside the target.
From January, this will rise to 28 per cent of cars and 16 per cent of vans and the target will keep ratcheting up until there is a complete ban on new petrol and diesel sales, which the Government hopes to once again set at 2030.
A more likely outcome from the new consultation will be a reduction in the financial penalties, which ministers have admitted is adding “pressure” to the sector and have repeatedly highlighted that it is a policy the Labour Government inherited from the Conservatives.
The Chancellor also raised the issue of fines for businesses, adding the consultation will look into the penalties “ because we want to keep investment, we want to keep jobs in Britain”.
Her comments come after Vauxhall owner Stellantis announced it would be closing its Luton site, blaming the Government’s EV mandate for the decision.
Manufacturers have made it clear to ministers that while they support the targets to switch to electric, there is not the consumer demand to help them meet the annual thresholds.
Lisa Brankin, the chair and managing director of Ford UK, said the industry needs government-backed incentives to boost the uptake of electric vehicles by customers.
“Because without demand the mandate just doesn’t work,” she told the BBC.
She said Ford has invested “significantly” in the production and development of EVs, with “well over” £350 million invested around electrification in the UK, adding: “So we kind of need to make it work.”
Dr James Richardson, director of analysis of the independent advisory Climate Change Committee, told MPs on the Environmental Audit Committee the car market was on track to meet this year’s targets for electric vehicle sales but the van market was “much more challenging”.
Measures are needed to make electricity cheaper and improve access to charging infrastructure – including substation connections to allow van fleet charging and low-cost overnight charging for people who do not have driveways, he added.