Budget 2023: Chancellor’s policies threaten to stall electric car sales, warn experts

The Chancellor has been accused of “sabotaging” the mass adoption of electric cars in the UK with his latest Budget.

EV campaigners and industry experts have hit out at Jeremy Hunt’s spring statement, claiming that it has done nothing to further the government’s ambition for more drivers to switch to EVs and, in some cases, could harm progress.

Hunt made no reference to electric vehicles or charging infrastructure in his Budget, a decision observers said was a missed opportunity to provide fresh incentives for drivers and support for the EV industry. He did, however, confirm a further fuel duty freeze for petrol and diesel cars, a move some claim could put drivers off choosing an electric car.

Automotive expert and founder of the EV campaign group FairCharge, Quentin WIllson accused the Chancellor of sabotaging the government’s own net zero ambitions by failing to change “archaic” policies which leave drivers paying more tax on public charging. He said: “The Chancellor missed a crucial moment to ensure the UK keeps pace with Europe and the US in the race to net zero. This statement was an opportunity to slash the ludicrous VAT differential between public (20%) and home (5%) EV charging, an unfair and outdated policy hindering EV uptake among those without driveways.

“It’s enormously disappointing to see this low-cost intervention once again brushed aside. This is a huge policy failure and the mass adoption of EVs in the UK is being sabotaged by archaic Treasury policy."

Other experts warned that with high energy prices, struggling charging infrastructure and a lack of incentives, persuading drivers to switch to EVs could become harder.

Hugo Griffiths, consumer editor at carwow said the Budget lacked substance or clarity on the shift to electrification. He commented: “The fact that the Chancellor has seen fit to not increase fuel duty will surely be welcomed, but the government is clearly lacking ideas in a number of key strategic areas. To name but a few: we are still being kept in the dark with regard to how fuel duty will be replaced once electric cars are mandated; there is also little clarity on how EVs will be made affordable for private buyers as we edge ever closer to 2030, something 66% of carwow customers think the Government should provide support for.”

Nick Williams, transport managing director at Lloyds Banking Group, said a lack of new support for charging infrastructure was “disappointing”. He added: “It remains impressive that electric vehicles are entering the roads at record rates, but to meet this growing demand we need a charging network that can deliver, both in terms of availability and reliability.

“With the upcoming Zero Emissions Vehicle mandate also incentivising manufactures to bring more electric vehicles to the UK market, the call for an expanded charging network will be even greater, so the lack of support in today’s statement is a big setback.”

Lisa Watson, director of sales at Close Brothers Motor Finance, said the fuel duty freeze was good news for petrol and diesel drivers but could hinder efforts to increase EV sales. She commented:  “Though previous research has suggested electric vehicles (EVs) could be cheaper in the long run, given current extortionate electricity bills and the previous announcement that electric vehicles will be subject to Vehicle Excise Duty, there seems little incentive to encourage consumers to transition to AFVs.

“As well as investing in infrastructure, the government needs to introduce measures to ensure AFVs are a viable option if they are serious about implementing the 2030 ban on new diesel and petrol cars. If they don’t, the road to 2030 will be a bumpy one.”

Jim Holder editorial director at What Car? said that the government also needed to do more to support research, development and manufacturing in the UK, warning that the industry was at a “pivotal point” as countries try to persuade car makers to invest in vehicle and battery manufacturing facilities.

He noted: “What the budget failed to tackle was the growing need for significant government support for the automotive sector. If the UK is serious about remaining a manufacturing hub in the electric vehicle era, the government must invest more in the sector, otherwise it risks falling behind its global competitors.”

The Treasury defended its efforts to support EV uptake and highlighted that the VAT paid at public charging was in line with tax on most other products.

A Treasury spokesperson told NationalWorld: “To drive the UK’s move to electric vehicles, we have provided over £2.5 billion to cut down purchase costs for drivers and to build the necessary infrastructure to support their usage, such as local on-street residential charging and targeted plug-in vehicle grants.

“Since 2020, £1.6bn has been invested in EV charging, including through the Rapid Charging Fund and the Local EV Infrastructure Fund, and zero-emissions vehicle owners continue to enjoy a range of generous tax measures and purchase subsidies including low first-year Vehicle Excise Duty, the plug-in van grant of up to £5,000 for vans, and generous 100% first year capital allowances for zero-emission cars and vans.”

They also pointed out that VAT was set at 20% for most goods and services and the 5% domestic energy rate was intended to keep household energy bills down. They added: “This relief was not designed or introduced for charging Electric Vehicles (EVs) at home, this relief applies for all uses of domestic energy.”