The Society of Motor Manufacturers and Traders (SMMT) expects battery electric vehicle (BEV) supply volatility to continue as carmakers adjust product allocation following the last-minute rules of origin deal.

Carmakers operating in UK plants had tweaked production plans as they braced for a 10% tariff on their EV sales to the EU and lower demand. The trade tariff was avoided with a UK-EU agreement amendment in December.

The association did not disclose estimates for the production disruption nor when it expects production lines to be normalised.

Yet, SMMT announced Monday new BEV sales have increased 21% on-year in January to 20,935 units. The market share of 14.7% is higher year-on-year, but lower than the 16.5% share seen in 2023, Kallanish notes.

While fleet and business demand for BEVs rose by 41.7% in January, private buyer registrations dropped by 25.1%. This ongoing trend “will undermine Britain’s ability to deliver net zero,” the SMMT warns. “It is increasingly clear that private buyers need more support to switch.”

The UK registered its millionth BEV last month. The country is the only major market to combine a 2035 ban on new ICE vehicles with a mandated zero emission vehicle market share, but without any significant consumer incentives. Carmakers are now urging the government to temporarily halve VAT on new BEV purchases. The move would cost the Treasury an average of £1,125 per car and put over a quarter of a million electric cars on the road by the end of 2026, SMMT calculates.

“It’s taken just over 20 years to reach our million EV milestone – but with the right policies, we can double down on that success in just another two,” comments SMMT ceo Mike Hawes. “Market growth is currently dependent on businesses and fleets. Government must therefore use the upcoming Budget to support private EV buyers, temporarily halving VAT to cut carbon … Manufacturers have been asked to supply the vehicles, we now ask government to help consumers buy the vehicles on which net zero depends.”

David Borland, EY UK & Ireland automotive leader, notes that the BEV market share drop to below 15%, for the first time in a year, highlights the challenge that OEMs have to meet the target of ensuring at least 22% of their sales are zero emission vehicles. The mandate came into law at the start of this year. However, “the deferral of the rules of origin legislation will provide further impetus to automotive manufacturing, in the UK and continental Europe,” he adds.

In January, the overall new UK car market recorded an 8.2% growth. Plug-in hybrid electric vehicles (PHEVs), which accounted for 8.4% of total car sales in the month, saw an increase of 31.3% on-year to 11,944 registrations. Hybrid electric vehicles (HEVs) sales, however, declined 1.2% on-year to 18,744 units and a 13.1% market share.

SMMT expects BEV’s market share to reach 21% this year, down from a previous 23.3% share forecast over a year ago. The downgrade comes amid higher energy prices, inflation and interest rates, charging anxiety and mixed messaging from the government, the association concludes.