(Bloomberg) -- Carmakers are on course to offer at least £2 billion ($2.6 billion) in electric-vehicle discounts this year and still fall short of the UK government’s sales mandate, according to the industry’s trade body.
Steep price cuts helped lift battery-electric vehicle registrations to a record in September, the Society of Motor Manufacturers and Traders said Friday. But even last month, zero-emission cars came up shy of the 22% share target the government has set for this year.
“Despite manufacturers spending billions on both product and market support — support that the industry cannot sustain indefinitely — market weakness is putting environmental ambitions at risk and jeopardizing future investment,” said Mike Hawes, SMMT’s chief executive officer.
The industry group is echoing concerns that manufacturers including Stellantis NV and Ford Motor Co. have raised about the UK trying to hasten the phase-out of combustion engines while scaling back government incentives. The pullback of subsidies in several markets across Europe has contributed to a slump in EV demand and profit warnings from the likes of Stellantis and Volkswagen AG.
Battery-electric vehicle sales rose 25% last month, a big jump within an overall market where registrations increased just 1.1% from a year ago. EVs accounted for 20.5% of total sales in September and 17.8% of all registrations in the first nine months of this year.
The SMMT estimates that around 18.5% of cars sold this year will be EVs.
Automakers face fines of as much as £15,000 per vehicle if they fail to comply with the UK’s mandate, though they can avoid penalties by buying credits from overachieving manufacturers. The country also plans to end sales of new petrol and diesel cars from 2030.
The SMMT again called for support in a letter to Chancellor of the Exchequer Rachel Reeves on Friday, ahead of her budget later this month. The letter, co-signed by the UK heads of carmakers including Stellantis, Volkswagen and Nissan Motor Co., reiterates a plea for the value-added tax on EV purchases to be halved to 10% for the next three years, among other measures.
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