Buyers of electric cars have enjoyed no road tax until now – but all that is changing and the costs will begin to spiral
Electric car sales surged last month as buyers rush to avoid a more than £3,000 tax hike.
Trade body the Society of Motor Manufacturers and Traders said sales of battery electric vehicles surged almost 42% to 21,244 last month. Another big rise is predicted in March as buyers snap-up a new ‘25’ set of wheels, but also to dodge a vehicle excise duty jump from April 1.
Until now, electric cars haven’t had to pay road tax. But from next month, a £10 fee will apply for the first year, leaping to £195 a year for the next five years. New electric vehicles costing £40,000 or more will also pay a £425 a year“luxury car tax” from the second to sixth year of their life. Taken together, it means more than £3,100 worth of road tax for the first six years’ of the cars life. The SMMT says, with the average electric car costing £48,000, most buyers will be hit. Yet those who get in before April 1 will avoid the tax altogether, as will whoever might buy the car next.
While electric cars accounted for 25% of all new sales last month, that is still below the government’s 28% target for this year. Sales of plug-in hybrid vehicles (PHEVs) rose 19.3% year-on-year, and hybrid electric vehicles (HEVs) were up 7.9%. Just 4,241 diesel cars were sold last month, 15% fewer than February 2024. And while 39,865 petrol cars were bought, this was down more than 17%.
New car sales overall fell 1% to 84,054 last month. February comes ahead of the March numberplate change, it is always one of the smallest and most volatile months.
Despite talk of a backlash over billionaire Elon Musk’s political interference, Tesla Model 3 and Y were the two best selling cars in the UK in February. The Mini Cooper was the best seller last month, although Kia’s Sportage tops the table over the first two months of this year.
Mike Hawes, SMMT chief executive, said: “Although February’s figures show a subdued overall market, the good news is that electric car uptake is increasing, albeit at huge cost to manufacturers in terms of market support. It is always dangerous, however, to draw conclusions from a single month, especially one as small and volatile as February. With the all-important March number plate change now upon us, and tax changes taking effect in April that will, perversely, dissuade EV purchases, we expect significant demand for these new products next month – but, long term, EV consumers need carrots, not ever more sticks.”
Car makers are calling on the government to encourage further take of electric cars, arguing they provided more than £4.5 billion in discounts over the last year alone.
