Milestone: UK surpasses one million electric cars sold
The UK achieved a significant milestone in January 2024, marking the registration of its one-millionth electric vehicle, as reported by the Society of Motor Manufacturers and Traders (SMMT). Since 2002, a total of 1,001,677 electric vehicles have been sold in the country, with an additional 20,935 being registered in January alone. This is a huge achievement and one to be celebrated on the road to becoming net zero!
In January 2024, the new car market demonstrated a robust growth of 8.2%, totalling 142,875 registrations. This figure represents an impressive surge of nearly 11,000 units compared to the same period last year. Despite the positive industry performance, it is noteworthy that the upswing in new registrations was primarily fuelled by the fleet and corporate markets. Companies purchasing more than 25 units in one go, otherwise known as fleet buyers, have been behind the increase with demand for BEVs (battery electric cars) growing by more than 40%. However, there was a noticeable decline in demand for new cars among private buyers, witnessing a decrease of 15.8%.
This surge marks the most robust industry performance since January 2020, underlining the resilience and adaptability of the automotive market in response to changing consumer dynamics. The lack of sales to private consumers has prompted calls from the SMMT for the government to halve VAT on electric vehicles, to boost demand.
Government initiatives for electric vehicles
Electric vehicles (EVs) boast lower running costs compared to their petrol or diesel counterparts, but their initial purchase price tends to be approximately 30-40% higher, as highlighted by motoring organisations. Notably, companies offering electric car salary sacrifice schemes, such as The Electric Car Scheme, present an advantageous opportunity for employees. Through this employee benefit, individuals can access electric cars at a reduced cost ranging from 30-60%, leveraging the ability to pay before taxation is applied.
“Manufacturers have been asked to supply the vehicles, we now ask the government to help consumers buy the vehicles on which net zero depends.”
Individual electric car grants, previously valued at £1,500, ceased in 2022. Originally set at £2,500, the grant was reduced to £1,500 in December 2021, with eligibility limited to electric cars priced under £32,000. The decision to discontinue these grants aimed to redirect focus toward enhancing electric vehicle charging infrastructure.
From March 2024 until 2025, the government have introduced the Electric Vehicle Chargepoint Grant which is available for households with on-street parking. This grant assists electric car drivers in covering expenses for purchasing and installing EV charge points at residential properties, especially when incorporating a pavement charging solution. The scheme’s goal is to accelerate the adoption of electric vehicle charge points, particularly for users with on-street parking. Through this grant, you receive a 75% discount on the purchase and installation costs of a socket, capped at a maximum of £350. You can learn more about the EV Chargepoint Grant by visiting our dedicated blog on the topic!
In the preceding year, Prime Minister Rishi Sunak announced a five-year extension to the ban on new petrol and diesel cars, shifting the deadline from 2030 to 2035. This proclamation elicited a varied response from car manufacturers, as many had already made investments in electric vehicle production.
Zero emission vehicle mandate
Despite the postponement, companies are still obligated to meet stringent quotas for electric car sales, known as the "Zero Emission Vehicle (ZEV) Mandate." This was introduced as part of the Government’s net-zero strategy which also includes £620 million of extra funding for the plug-in car grant and EV charging infrastructure. A further £350 million will be allocated to supporting the UK automotive sector to produce more electric vehicles and support the supply chain.
The ZEV mandate dictates a rising percentage of individual manufacturers' total annual sales to be zero-emission vehicles each year. These figures resulted from a consultation with the car industry and environmentalists. Ensuring that "more than one in five cars sold are zero-emission models" is imperative, as failure to comply will result in substantial fines. Additionally, this sales target will incrementally rise each year until the original 2030 deadline.
How much does ZEV increase year-on-year?
The mandate commences this year, requiring a 22% sales quota for 2024, escalating to 80% by 2030 and reaching 100% in 2035. The interim targets for commercial vehicles are comparatively lower, with only "10% of vans sold required to be electric in 2024," progressing to 70% by 2030.
| Year | Proportion of car sales to be zero emissions | Portion of van sales to be zero emissions |
|---|---|---|
| 2024 | 22% | 10% |
| 2025 | 28% | 16% |
| 2026 | 33% | 24% |
| 2027 | 38% | 34% |
| 2028 | 52% | 46% |
| 2029 | 66% | 58% |
| 2030 | 80% | 70% |
Fines if targets are not met
In the initial years of the ZEV mandate, car manufacturers falling short of their targets can trade credits with those who surpass them. The borrowing capacity for credits will be 75% in 2024, gradually decreasing to 25% by 2026. The fines, as mentioned earlier, will be set at £15,000 per vehicle for any non-ZEV cars sold outside of the manufacturer allowances, with van fines starting at £9,000 in 2024 and rising to £18,000 thereafter.
The Department for Transport (DFT) has expressed that they "do not expect any manufacturers will need to be fined" as there are various flexibilities, including credits, banking, borrowing, trading, and conversion. Final compliance payments are considered a last resort.
Upon announcing the ZEV mandate, the Department for Transport stated that it would be "the most ambitious regulatory framework for the switch to electric vehicles in the world." This approach aims to provide certainty for manufacturers and instil confidence in investors to invest in charging infrastructure.
“These regulations give the green light to the biggest transport revolution in half a century that will lead to cleaner, cheaper cars for all.”
What is happening in the market?
The year 2021 marked a significant leap forward for electric vehicle sales, doubling from the figures of 2020 to reach 6.75 million. Notably, the number of electric vehicles sold in a single week in 2021 surpassed the total sales for the entire year of 2012. This rapid growth prompts questions about market dynamics and manufacturers' responses to the increasing adoption of EVs.
There are now 200,000 Tesla’s in the UK
The recent announcement of over one million electric vehicles in the UK reveals that nearly one-fifth of all EVs on British roads are Teslas. This statistic may not come as a surprise, given the considerable presence of Teslas on the roads. Notably, the Model Y secured the spot as the best-selling electric car in the UK for both 2023 and 2022, while the Model 3 held the title in 2021.
Country sales and delivery manager at Telsa, Michael Oats commented that reaching this milestone “shows how far Tesla has contributed to the UK’s transition to sustainable energy. More customers are not just looking towards Tesla as an option for sustainability, but also for safety and affordability.”
Tesla has established a robust charging network with its superchargers, boasting over 1,400 ultra-rapid charging devices distributed across more than 140 locations nationwide.
Volvo has stopped building diesel engines
Volvo have stopped building diesel engines with the last one being an XC90 SUV built in Sweden in late March - this was announced at Climate Week in New York, in September 2023. Wondering what this has to do with electric cars? This is a sign of the time and it confirms a deliberate strategy to accelerate electric vehicle adoption.
In 2023, a notable 70% of all Volvos sold in Europe were equipped with electrified powertrains, while globally, the figure stood at 34%. This shift marks the end of an era for Volvo, as it discontinues its diesel engine offerings after a 45-year run. Volvo's journey with diesel engines began in 1979 with the launch of the GL D5, which featured the world's first six-cylinder diesel engine in a passenger car.
How does electric car salary sacrifice fit into this?
As mentioned previously, the number of individuals buying electric cars is not at the desired level. SMMT Chief Executive, Mike Hawes makes a good point in saying that:
“The government must use the upcoming Budget to support private EV buyers, temporarily halving VAT to cut carbon, drive economic growth and help everyone make the switch. ”
We know switching to an electric car is one of the most significant ways you can make a positive change towards net zero and salary sacrifice makes this possible. Electric car salary sacrifice allows employees to save 30-60% on any electric car by reducing their salary in exchange for an electric car as a benefit - making electric cars an affordable choice for everyone.
At The Electric Car Scheme, our goal is to make net zero the obvious choice. Every company in the UK can help their employees on their journey to net zero by offering The Electric Car Scheme as an employee benefit. The Electric Car Scheme is no cost to the employer to set up and run and with our Complete Risk Protection, there is no risk to the employer.
Employees can choose from a wide range of cars, from the Citroen Ami to the Porsche Taycan. In the following images, you can see how the salary sacrifice is broken down for two different cars at different price points.
The Polestar 2 is available to salary sacrifice from £506 per month. Employees would save a total of £335 per month in income tax and national insurance savings every month!
Likewise, the MG4 is another car available to salary sacrifice. Employees would save £5,255 over three years compared to the standard lease cost if they chose to salary sacrifice. Employee income tax savings are £164 and national insurance savings are £8 every month.
If you would like to learn more about electric car salary sacrifice for your company and join the mission of getting more individuals into electric cars, visit our website.
Our pricing is based on data collected from The Electric Car Scheme quote tool. All final pricing is inclusive of VAT. All prices above are based on the following lease terms; 5,000 miles pa, 48 months, and are inclusive of Maintenance and Breakdown Cover. The Electric Car Scheme’s terms and conditions apply. All deals are subject to credit approval and availability. All deals are subject to excess mileage and damage charges. Prices are calculated based on the following tax saving assumptions; England & Wales, 20% tax rate. The above prices were calculated using a flat payment profile. The Electric Car Scheme Limited provides services for the administration of your salary sacrifice employee benefits. The Electric Car Scheme Holdings Limited is a member of the BVRLA (10608), is authorised and regulated by the FCA under FRN 968270, is an Appointed Representative of Marshall Management Services Ltd under FRN 667174, and is a credit broker and not a lender or insurance provider.
