The Society of Motor Manufacturers and Traders (SMMT) has found that the UK automotive sector could fuel £50 billion of green growth in the next decade should the right market incentives and policies be in place.
In the Vision 2035: Ready to Grow report, SMMT detailed how smart policies and consumer incentives would help 17 million drivers switch to zero-emission motoring by 2035, halving the number of fossil fuel cars in use. This would help reduce the carbon footprint of British transport.
Through the implementation of targeted policies, the new car market value could grow from just over £70 billion a year today to a lucrative £80 billion energy year over the next decade.
It is worth noting that progress has been made in the UK to scale its clean transportation sector. Within a decade, choice has gone from just 16 battery electric car models to more than 100, covering every vehicle segment. Uptake has also gone from fewer than two new BEV registrations per hour to almost 37 per hour, reaching a market share of around 16%.
These two factors mean the UK is Europe’s second-biggest zero-emission car market. Despite this positive outlook, growth has started to stagnate, particularly since consumer incentives ended in 2022.
Halving VAT could help UK capitalise on the growing market
According to SMMT, if market and tax enablers remain as they currently are, almost 6.4 million electric cars will reach the road between now and the end of 2030 – rising to 16.3 million by the end of 2035.
This assumes no disruption to supply or economic shocks and that the EV chargepoint rollout keeps pace with uptake.
But this could also be increased and supported with various policy implementations. For instance, halving VAT for three years has been hotly debated across the industry. SMMT believes the government should also consider amending the Vehicle Excise Duty expensive car supplement to avoid an EV tax hike in 2025, hitting new and used car buyers.
This could lead to an additional 300,000 new zero-emission car registrations on top of the current outlook.
Alongside other measures, the government must also ensure everyone has a ‘right to charge’ by mandating delivery of public charging and refuelling infrastructure across the UK with binding targets. Doing so could lead to a “significant uplift and reliability of all types of public chargers across the UK”, SMMT said.
In the near future, up to the end of 2035, the UK plans to boost its global competitiveness in light vehicle production. According to SMMT, this effort would result in over nine million zero-emission cars and vans being manufactured in British factories. The expected revenue at factory gate prices would exceed £290 billion, marking a 5% increase from the current outlook.
Mike Hawes, SMMT chief executive, said: “The UK automotive sector has proved its resilience during recessions and pandemics. Now, it’s ready to grow. With voters preparing to cast their ballots next week, the next government will have the power to unlock the sector’s potential, boosting the economy, creating jobs and cutting carbon.
“The industry’s vision is of green growth and a fair transition for all. Whoever forms the next government, we urge them to create the conditions that will allow us to deliver on our promise.”