EV Discounts Called 'Unsustainable' as Sales Rise

The SMMT has warned that the heavy discounts on electric vehicles currently driving sales are financially unsustainable for the industry. While EV sales are climbing, the organization points to a significant disconnect between consumer purchasing behavior and the government's strict ZEV mandate targets.

Manufacturers are absorbing substantial costs to lower prices and stimulate demand, creating a market environment that the SMMT describes as precarious. The warning comes as the industry faces pressure to balance rising sales volumes with the economic reality of price reductions.

The SMMT has raised alarms about the stability of the electric vehicle market, citing a growing gap between consumer demand and government ambitions. Despite record-breaking sales figures, the industry body asserts that the current market momentum is fueled by unsustainable manufacturer incentives rather than organic consumer uptake.

Automakers are currently offering significant price cuts to meet regulatory requirements and attract buyers. However, the SMMT argues that this strategy cannot be maintained indefinitely without causing financial strain on manufacturers. The organization emphasizes that a healthy market requires a balance of affordability for consumers and profitability for producers.

Recent data indicates that EV sales are on an upward trajectory. However, the SMMT notes that these numbers are not yet meeting the government's aggressive targets under the Zero Emission Vehicle (ZEV) mandate.

The disparity between sales growth and regulatory requirements has led to a difficult situation for car manufacturers. They are compelled to subsidize vehicle costs to bridge the gap, resulting in a market that is growing but not necessarily profitable for those involved.

• Increased consumer uptake due to lower prices
• Regulatory pressure to meet specific sales quotas
• Manufacturer margins being squeezed by discounts

A central issue identified by the SMMT is the high upfront cost of electric cars compared to their petrol or diesel counterparts. Even with substantial discounts, EVs remain out of reach for many average consumers.

The reliance on discounts to lower the effective price highlights a structural problem in the market. Without these incentives, sales figures would likely plummet, jeopardizing the transition to zero-emission transport. The SMMT suggests that direct government support is necessary to make EVs genuinely affordable for the mass market.

In light of these challenges, the SMMT is urging the government to take immediate action. The organization argues that the current trajectory is not viable for the long-term health of the automotive sector.

Proposed measures include targeted incentives for consumers and support for the industry to manage the transition costs. The SMMT warns that without intervention, the gap between ambition and reality could widen, potentially stalling the progress of electrification in the UK.