Ford Motor Co. has urged the UK government to reinstate subsidies to support electric vehicle (EV) sales, warning that current market demand is insufficient for automakers to meet stringent regulatory targets. Lisa Brankin, Ford UK’s chair and managing director for Britain and Ireland, called for government intervention as part of the upcoming budget to stimulate consumer interest in EVs.
“There simply isn’t enough customer demand to meet the objectives set by the government,” Brankin told Bloomberg News. “If the government wants these goals to succeed, it needs to step in with support.”
The UK has set ambitious mandates, requiring 22% of new car sales to be zero-emission vehicles by the end of this year, with that figure climbing to 80% by 2030. For vans, the target starts at 10% in 2023, increasing to 70% by the decade’s end. Automakers face hefty fines of up to £15,000 ($19,900) per non-compliant vehicle, although they can delay penalties by utilizing a credits-trading program and compensating in future years. Ford, like several other manufacturers, will not meet the 22% EV target for this year, but will use the flexibility of the trading program to avoid fines, according to Brankin.
“The targets are ambitious,” she acknowledged. “If the government wants to see them realized, it needs to offer support.”
Ford’s request comes amid a broader reduction in EV incentives across Europe, while Chinese automakers aggressively enter the market with competitive pricing.
Need for Incentives Ford’s appeal echoes similar calls from other automakers, including Stellantis, the parent company of Jeep and Vauxhall, which in June warned it may halt production in the UK if EV sales targets aren’t adjusted. Brankin stopped short of specifying how Ford would respond if the government doesn’t heed its call for subsidies, but highlighted key measures that could help boost demand.
Brankin advocated for cutting the value-added tax (VAT) on battery-electric vehicles (BEVs) in half to 10% for the next three years, mirroring a recommendation from the Society of Motor Manufacturers and Traders (SMMT). Additionally, she suggested reducing VAT on public charging stations, which currently cost more than home charging, to encourage EV adoption by consumers without access to home chargers.
The UK government has already announced plans to ban new petrol and diesel vehicle sales by 2030, with limited exceptions for hybrids, which will be allowed until 2035. However, details regarding the hybrid policy remain unclear.
Meeting the Targets From January to August 2023, fully electric vehicles accounted for 17.2% of new car registrations in the UK, short of the 22% target for the year, according to SMMT data. Brankin noted that Ford’s electric vehicle models will launch in 2024, including the Explorer SUV, which has faced delays in reaching the UK market.
While Ford is committed to avoiding cuts to petrol and diesel vehicle sales to meet targets, the company faces significant challenges ahead. “We’ll do everything we can to avoid reducing sales of traditional vehicles to hit the zero-emission target,” Brankin added.
In addition to her call for consumer-focused incentives, Brankin also urged the UK government to maintain the plug-in van grant and corporate tax relief for commercial vehicles. Ford, which dominates the commercial vehicle market in the UK with nearly a one-in-three market share, sees these as crucial to maintaining growth in the commercial EV sector.
Expanded Analysis: Ford’s push for government intervention highlights the current challenges in the EV market, where consumer demand has not yet caught up to regulatory ambitions. The company’s request for VAT cuts and charging infrastructure incentives aims to alleviate the cost burden on consumers, which remains one of the primary barriers to EV adoption. In particular, the call for equalizing VAT on public and home charging is significant for urban customers who may not have access to home charging stations, a segment of the population critical to achieving widespread EV adoption.
From a broader perspective, Ford’s appeal also underscores the pressure facing automakers as they navigate the transition to electric powertrains. While European governments have set aggressive targets, the pace of consumer adoption remains slower than anticipated, particularly as high inflation and rising interest rates weigh on household budgets. The challenges are exacerbated by the influx of affordable EVs from Chinese manufacturers, creating competitive pricing pressure for traditional Western brands.
In terms of market opportunity, meeting the UK’s ambitious EV targets could present significant revenue potential for automakers capable of scaling up their electric vehicle offerings. However, without government subsidies or consumer incentives, these targets may be difficult to meet, forcing companies to rethink their sales strategies and investment timelines.
