Electric vehicle duty is the wrong measure at the wrong time

BUDGET 2025: Government is backing transition to electric vehicles, but eVED will undermine demand, says the SMMT's Mike Hawes

Mike Hawes

Mike Hawes

Government has recognised the automotive industry as a pillar of national strategic importance, backing it with an industrial strategy and additional £1.5bn to drive competitiveness and investment. 

Deferring the end of employee car ownership schemes into the next parliament, meanwhile, will be welcomed by workers across the sector.

Changes to the Vehicle Excise Duty (VED) expensive car supplement are welcome, as is the additional £1.3 billion funding for the Electric Car Grant and support for charging infrastructure. These will help, but will not offset the impact of introducing a new Electric Vehicle Excise Duty (eVED) – the wrong measure at the wrong time.

Manufacturers have invested to bring more than 150 EV models to market. However, the pressure to deliver the world’s most ambitious zero emission vehicle sales targets – whilst maintaining industry viability – is intense. With even the Office for Budget Responsibility (OBR) warning this new tax will undermine demand, government must work with industry to reduce the cost of compliance and protect the UK’s investment appeal.

Mike Hawes is chief executive of the Society of Motor Manufacturers & Traders (SMMT)