“No mitigation measures, including additional grant funding, could offset the message this measure would send consumers,” the SMMT said, noting that car makers have already spent a combined £8.5bn discounting EVs to hit their targets so far.
In a survey of 4368 car buyers, Autocar sibling title What Car? found that 52% would be put off choosing an EV if the pay-per-mile tax scheme were introduced and just 20% thought it was a good idea.
The SMMT also repeated its call for the government to reverse its decision to axe the Employee Car Ownership Scheme (ECOS).
ECOS, operated mainly by car makers and dealers, allows employees to buy new cars at significantly reduced prices, with low monthly repayment bills and little to no interest charged. Usually, after six months or 6000 miles, the employee then sells the car back and replaces it with another under the same terms.
The scheme accounts for around 100,000 registrations per year, equivalent to 5% of the new car market, and is viewed as a significant incentive for attracting and retaining talent within the automotive industry.
The government believes the scheme is unfair, because ECOS car owners don’t pay benefit-in-kind (BIK) tax or national insurance contributions, and so has pledged to end it from 6 April 2026.
The SMMT said this move “would cost the industry – and government – a combined £1.5bn per year” while putting some 5000 manufacturing jobs at risk. “Added to ongoing crippling energy costs and employment taxation, attracting much-needed investment will be ever more difficult,” it added.
In a speech to industry leaders and politicians ahead of the budget on 25 November, SMMT chief executive Mike Hawes said: “Government has said it will back automotive to the hilt and, for the most part, deeds have matched words, with trade agreements, regulatory flexibilities and an industrial strategy supplemented by a £2.5 billion fund that is designed to support automotive as a growth sector.
“But with the good also came the bad and the downright ugly, with the proposed ending of Employee Car Ownership schemes. The Budget this week is a chance to align fiscal measures to growth and the future success of the sector.
“Rather than road pricing for EVs, we need to see measures that stimulate consumer demand, so we can deliver the tax revenues, jobs, investment, productivity and growth that is in everyone’s interests.”
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