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Subsidy cuts blamed for fall in UK sales of electrified vehicles

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Via Yahoo Finance

The British car industry has accused the government of undermining the sector after sales of electrified vehicles fell for the first time in more than two years.

Sales of cars with alternative fuels – including battery electric vehicles and hybrids – were down by 11.8% in June compared with the same month last year, the first annual decline since April 2017, according to the Society for Motor Manufacturers and Traders (SMMT).

Electrified vehicles accounted for about one in every 17 cars sold in June. Their share of the market needs to increase rapidly for the UK to meet its target of net zero carbon dioxide emissions by 2050.

Battery electric vehicle sales continued to rise strongly, by 61.7% year on year, but sales of plug-in hybrids, which combine a combustion engine with a battery that can be charged externally, halved compared with last year.

The SMMT blamed the downgrade of government subsidies in October. The £2,500 subsidy for plug-in hybrid vehicles was cut altogether, and the government reduced the grant for pure electric vehicles from £4,500 to £3,500.

Carmakers have relied on the subsidies to stimulate demand for electrified vehicles. Falls in sales of hybrids, which still emit significant amounts of carbon dioxide, would make it more difficult for carmakers to cut their fleet average emissions, opening them up to the risk of fines worth hundreds of millions of euros.

Battery electric vehicles emit no carbon dioxide directly, but consumer uptake has been held back by concerns over their range and a lack of readily available charging infrastructure, as well as cost.

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Large-volume carmakers must reduce the average emissions of the cars they sell to below 95kg of carbon dioxide per kilometre driven after 2021. Only two brands – electric vehicle maker Tesla and Daimler’s Smart microcars – out of 50 analysed by data company Jato Dynamics already met the limits in 2018.

Overall, new UK car sales in June were down 4.9% year on year, the fourth consecutive month of falling sales. The industry has blamed the slump in demand on Brexit uncertainty and the decline of diesel vehicles after emissions scandals.

Meanwhile, sales of diesel models fell by a fifth year-on-year, further complicating the industry’s efforts to meet carbon dioxide emissions targets. Diesel cars emit particles that directly cause health problems as well as poisonous nitrogen oxides, but they tend to have a lower carbon dioxide output than those running on petrol.

Relations between the industry and the government have been strained in recent years, with carmakers complaining of inconsistent policy. At the same time, executives across the British car industry have warned that a no-deal Brexit would be deeply damaging to the sector.

Mike Hawes, the SMMT chief executive, said: “Another month of decline is worrying but the fact that sales of alternatively fuelled cars are going into reverse is a grave concern. Manufacturers have invested billions to bring these vehicles to market but their efforts are now being undermined by confusing policies and the premature removal of purchase incentives.

“If we are to see widespread uptake of these vehicles, which are an essential part of a smooth transition to zero-emission transport, we need world-class long-term incentives and substantial investment in infrastructure.”

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A spokeswoman for the Department for Transport said: “The plug-in car grant has supported the purchase of 180,000 new cars with over £700m, including 100,000 plug-in hybrids, and the government is now focusing on the cleanest, zero-emission models. That focus has paid off, with registrations of battery electric vehicles up over 60% this year compared to the same period in 2018.”

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