The UK is the ‘worst in Europe’ for electric car incentives, Polestar boss says Achi-News

Government targets on electric car sales are likely to be missed unless customer incentives are introduced quickly, according to the UK managing director of Swedish car company Polestar.

Matt Galvin has described the UK as “the worst” when it comes to government incentives for customers to switch to electric cars.

“It is widely understood and accepted that the UK is the worst motivated market in Europe for the transition to electric cars,” said Galvin. “We’re the worst – make no bones about it – it’s a fact. No wonder there are many car manufacturers struggling to reach the 22 per cent ZEV mandate.”

This year, the UK government introduced its zero emission vehicle (ZEV) mandate, which sets out the percentage of zero emission cars and vans each car company must sell each year. For 2024, the target is 22 per cent for cars and 10 per cent for vans, rising to 28 per cent for cars and 16 per cent for vans in 2025. The government is targeting 80 per cent of new cars and 70 percent new cars. vans sold in Britain with no emissions by 2030, increasing to 100 per cent by 2035.

According to the latest figures from industry trade body SMMT, only 17.2 per cent of cars sold in the UK this year are battery electric vehicles. Carmakers who miss targets will have to pay penalties, with various short-term solutions in place to avoid those penalties, including borrowing from future sales of zero-emission vehicles and buying credits from companies that have exceeded targets .

As a 100 per cent electric car company, Polestar will be able to sell credits to other car companies – a useful position for Polestar, which has seen its sales drop by 50 per cent year-on-year in 2024.

However, Matt Galvin is critical of the mandate and the impact it has on consumers and the car industry. “The mandate creates a market that is simply unnatural,” he said. “Customers will switch to electric cars when they are ready, but also when they are motivated to do so – it cannot be up to the manufacturer to provide that motivation.”

Polestar is incentivizing customers of even its newest models with zero percent finance and free home charging points. Other carmakers are going further with multi-thousand pound discounts on electric vehicles and deals that make electric cars cheaper to lease than equivalent petrol models.

“What we’re missing right now is some government support and incentives to help with that transition,” Galvin said. “The time is now for the government to step in and provide some mechanism to assist customers in the transition. It can’t all be sticks, we have to have some carrots too.

“Car manufacturers are providing those morons with some distressing discounts right now. We can’t be blamed for not trying to get customers to move [to EV]. What needs to happen now needs to happen in parallel. We need to do our part, and I think we are, and the government needs to do its part. That is extremely important.”

SMMT has called on the government to halve VAT on new electric cars to ten percent for a period to stimulate demand for electric vehicles. The group also wants to balance the VAT payable on public electric vehicle payments with the same five per cent tax on household electricity. Currently 20 per cent VAT is charged on public payments.

Galvin thinks the government should go further to promote interest in electric vehicles. “I want a short VAT-free period on new cars. I think we’re at the point now where we need a bit of a shock. The Government needs to step in and step up to provide some compelling incentives to assist this change.

“We would also call for some support for the used car market. Aggressive discounting of new cars in the last 12 to 18 months has had an impact on the used market. Those who bought electric cars and have been burned by the poor residual values ​​are going to need some convincing to buy another one, because we are coming around to the second and third cycle now of people switching those electric cars.

“The Netherlands was a great example last year, where there was a €2,000 subsidy for anyone who bought a second-hand EV. Price is a big barrier for many people trying to move to electric vehicles at the moment and used cars provide that lower price entry point.”

Although Labor has reinstated the 2030 ban on the sale of new internal combustion engine cars, it has not yet clarified whether hybrid cars can still be sold after that date. News about that will come “in due course” according to the Department of Transport.

Galvin wants certainty about the ban on behalf of consumers and the industry. “It’s another confounding factor,” he said. “If that ban is going to come into force, then we have to have clarity about whether or not hybrids are allowed between 2030 and 2035.”