Currently reading: VW Group calls for EV incentives to accelerate UK demand
Cuts to VAT and VED could signal "direction of travel" for industry, according to VW Group's UK boss

The boss of the UK's most popular car maker has called for incentives for private buyers of electric cars to help stimulate demand.

Alex Smith, MD of Volkswagen Group UK, said that incentives were “eminently sensible” to help “signal that this is the direction of travel” towards EVs as the UK car market readies to be solely electric from 2035.

His comments follow a House of Lords report that criticised the UK government for “prematurely” ending previous incentives that were in place in the market to subsidise the sale of EVs. The Plug-in Car Grant was suddenly axed in 2022.

“There are things that could be undertaken in the retail market to further accelerate demand," Smith told Autocar in an exclusive interview on the day of the report's publication.

“We would be absolutely in favour of well-targeted, specific and realistic incentives to signal that decarbonisation of road transportation is the aim and that battery-electric vehicles are a very, very significant tool in achieving that.

“Therefore having incentives in place is eminently sensible in the private market, because you're sending that signal that this is the direction of travel.

"You do need signalling behaviour in order to ensure that there isn't consumer confusion.”

Smith listed a 10% VAT rate on the sale of new EVs as one potential option, mirroring something seen in other sectors, along with a cut again in VED (road tax) for EVs.

Longer-term security around benefit-in-kind tax rates for EVs would also help ensure the strong demand from fleet buyers remained for EVs too, he said.

Skoda Enyaq vRS front quarter driving

Binding targets for the roll-out of infrastructure to support EVs should also be introduced, according to Smith.

He believes this to be only fair, as car manufacturers now have a legislated target to hit for the sale of EVs themselves - 22% this year - as part of the government's new ZEV mandate.


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“Car manufacturers have a binding target for the proportion of zero-emission vehicles that we sell. I think it would be useful to have binding targets for infrastructure roll-out.

“If you're providing an infrastructure for the national take-up of an environmentally beneficial product, then there's going to have to be some level of intervention to make sure there's a ubiquity to the charging infrastructure.”

Smith also supported growing calls for a cut in the VAT rate of public charging from 20% to match the 5% that home charging attracts.

However, Smith believes that there's a “disproportionate amount of thought and concern” given to public charging, as 90% of charging of Volkswagen Group EVs is done at home. 

VW ID4 GTX front quarter driving

Smith was happy with the Volkswagen Group’s EV performance in the UK, having secured a 20% market share for them in 2023.

Of the one million EVs sold in the UK so far, around 160,000 are Volkswagen Group models, so the firm’s market share is growing.

In 2023, 16% of the company's sales were EVs, and Smith said it was the intention to comply with the 22% of sales needed this year to hit the ZEV mandate.

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He said the Volkswagen Group would continue to do its bit to support the EV roll-out in the UK by continuing to “bring really attractive products to market” and ensuring that its websites are “clear, transparent and informative” in explaining the benefits and also limitation of EVs. 

The Lords report also criticised some sections of the media for the “scale of misinformation” around EVs and their perceived drawbacks. Smith said such stories made him simply “more determined” to prove the benefits of EVs. 

One topic that has drawn widespread coverage is the rising cost of insurance for EVs. Smith said the Volkswagen Group was actively working with the insurance industry to help build up the risk profile of them.

He said that an equivalent frontal-impact repair cost of a Volkswagen ID 3 was 8% higher than that of an equivalent Volkswagen Golf.

Mark Tisshaw

Title: Editor

Mark is a journalist with more than a decade of top-level experience in the automotive industry. He first joined Autocar in 2009, having previously worked in local newspapers. He has held several roles at Autocar, including news editor, deputy editor, digital editor and his current position of editor, one he has held since 2017.

From this position he oversees all of Autocar’s content across the print magazine, website, social media, video, and podcast channels, as well as our recent launch, Autocar Business. Mark regularly interviews the very top global executives in the automotive industry, telling their stories and holding them to account, meeting them at shows and events around the world.

Mark is a Car of the Year juror, a prestigious annual award that Autocar is one of the main sponsors of. He has made media appearances on the likes of the BBC, and contributed to titles including What Car?Move Electric and Pistonheads, and has written a column for The Sun.

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russ13b 7 February 2024

ID.3 priced from £37,470, Golf mk8 priced from £26,945, prices from VW's website at the time of posting. £10 and/or £180 of VED (2025 onwards rule changes at today's prices), or a few pennies of VAT on electricity is the problem? It's not charging infrastructure that's the problem, it's the nonsense involved with payments and subscriptions. To charge a 62kw/h ID.3 at a BP charger - 44 to 85p/kwh depending on if you've joined the club - will cost £27 to £53, with a claimed range of 215 miles. Petrol at BP stations currently average 143.3/L, at 40mpg (i've seen people saying they get that real-world) 215 miles will cost £40. Charging at home (25p/kwh) would be £15 (£413 to £1210/year less than BP chargers) and it'll take 86,000 miles (11.6 years of uk average mileage) for the ID.3 to offset the higher list price. 179,166 miles - 24 years - at the 44p lowest charger price. After 20,000 miles the ID.3 should be better for the environment.

Andrew1 8 February 2024

It costs me £5 to charge at home overnight. Very rarely need to charge on the way, and certainly not 0-100.

The problem with EVs is people spreading fake horror stories, which I am sure you know a thing or two about.

artill 8 February 2024
Andrew1 wrote:

It costs me £5 to charge at home overnight. Very rarely need to charge on the way, and certainly not 0-100.

The problem with EVs is people spreading fake horror stories, which I am sure you know a thing or two about.

We all know that people who dont go far, and can charge at home can make an EV work. Now imagine you need to charge every day or 2, but cant charge at home. That doesnt make an EV more appealing, does it!

russ13b 8 February 2024

Only saying it costs you £5 doesn't mean anything, you haven't stated how much it actually charged, the rate you pay, how far you drive, how many nights a week you charge; the information is basically useless to the point of being misleading or dishonest. What are you actually trying to say by "which i am sure you know a thing or two about"? I've shown all the information used to calculate everything, where it came from, the onlly thing missing are the actual websites as whenever i include a link my comments never get posted; it's easily checked. I used BP as they do both charging and petrol/diesel, using different companies could easily be accused of looking for a best or worst case scenario. All that being said, I pay 25.31p per kwh - Octopus energy, regular tarrif, rate from December's bill - so £5 would give 19.76kwh, which with a 62kwh ID.3 doing the claimed range/economy would be 73.25 miles, which would be around £12.15 with a 40mpg petrol Golf, charging with BP would cost £8.69 to £16.80. You haven't explained how anything i'd stated was incorrect, or, how some VED and VAT really is the reason for EVs not selling as well as someone from VW might hope they do. National Grid ESO shows 138g co2/kwh (8pm, 08/02/24), 2726.9g for 19.76kwh, and 23g/km assuming i've guessed your mileage correctly. Where's the horror story?

RightSaidFred 7 February 2024
Good to see these comments! Make better EVs and the market will come to you, VW!

The statistic that "90% of charging is done at home" is due to the representation of the audience (or lack of) i.e. the people choosing to go EV are the people who *can* charge at home. Those who can't charge at home are the ones having an EV forced on them (or masochists).

The ZEV mandate is a ridiculous policy.

And let's not forget the car industry wouldn't be in this position had it not been for the lack of trust since the lies and cheating of DIESELGATE... it gave legislators carte blanche to wave a stick at an industry that appeared not to be trustworthy... looking at you, VW.

Dozza 7 February 2024

Why should taxpayers subsidise cars that most people cannot afford? No. No. No. No. 

Andrew1 8 February 2024

Why should taxpayers subsidise oil&gas industry which is killing the environment just to keep a few voters employed?