The Office for Budget Responsibility (OBR) has substantially reduced its projections for electric vehicle (EV) registrations in the UK in its ‘Economic and Fiscal Outlook’ released in conjunction with the recent Autumn Statement.
The OBR anticipates a decline in the contribution of EVs to total sales from 25% to 18% in 2023 and has nearly halved its forecast for EV registrations, revising the figure from 67% to 38% for 2027.
The OBR attributes this adjustment to the expectation that, without more affordable EV options, the previous rapid sales growth driven by early adopters, often of higher income, is likely to decelerate. The Government’s recent announcement of a five-year extension on the sales ban of new internal combustion engine (ICE) vehicles may prompt some consumers to defer their transition to EVs.
The report underscores that EVs present cost savings for consumers who can charge their vehicles at home. However, the economic advantage diminishes considerably when charging away from home and can even turn negative. Concerns about the availability of public charging infrastructure are prevalent among many drivers.
The primary catalyst propelling the adoption of EVs is currently the impending Zero Emission Vehicle (ZEV) Mandate, set to take effect in January 2024, which will require manufacturers to ensure that 22% of cars and 10% of vans sold are electric. The OBR explained that it had adjusted its EV projections to align with the trajectory of the ZEV Mandate throughout the forecast period.
Office for Budget Responsibility – Economic and fiscal outlook – November 2023 (obr.uk) – page 91.
See the BVRLA’s annual assessment of the UK’s progress towards zero-emission transport: Road to Zero Report Card.
