Industry reaction: Spring Statement ‘fails to address’ long-term electric vehicle demand

The Spring Statement was thin on announcements for the fleet and leasing sector, with the industry disappointed not to see action on a forthcoming hike in vehicle excise duty (VED) for electric vehicles (EVs).

The Office for Budget Responsibility (OBR) has halved its forecast for economic growth this year, from 2% to 1%, and lowered the forecast path for the level of productivity.  

But there was no announcement about the threshold for the surcharge on VED, also known as the expensive car allowance or the luxury car tax.  

Here the fleet and leasing sector, and wider automotive industry, have their say on the latest OBR figures and the Spring Statement from the Chancellor, Rachel Reeves.  

Responding to the Chancellor’s address, the British Vehicle Rental and Leasing Association (BVRLA) has reiterated the need for bold action to meet bold decarbonisation targets.

Toby Poston, chief executive of the BVRLA, said: “Electric vehicle registrations have never been higher, but the fleet and mobility services sector’s confidence in a fast, fair and affordable net zero transition is wobbling. 

“Today’s Spring Statement failed to acknowledge or address the uncertainty and lack of confidence surrounding the electric vehicle market.

“Our current decarbonisation targets are at major risk unless policymakers deliver a comprehensive set of measures to drive long-term demand. The clock is ticking, and next week’s VED hikes will see that pressure building.”

David Bushnell, director of consultancy and strategy at Fleet Operations, added: “The Spring Statement marks another missed opportunity to provide the leadership and clarity the fleet sector urgently needs.

“It offers little in the way of the consistent, long-term support needed to give businesses the confidence to invest and to accelerate fleet decarbonisation.

“We recognise the challenges facing the UK’s public finances, including commitments to increase capital and defence spending. But this must be balanced with policies that help the fleet industry invest, grow and lead the transition to zero-emission transport.

“The Department for Transport’s recent extension of the plug-in van grant, announced in February as part of a £120 million funding package, was a welcome move — but it’s hard to see this as anything more than a sticking plaster without broader, joined-up policy.

“At the same time, the withdrawal of the VED exemption for electric vans from April 2025 – aligning them with petrol and diesel models – sends a mixed and unhelpful message to operators who have already committed to cleaner transport.

“Treating 4.25-tonne electric vans as HGVs also continues to undermine progress. These vehicles are performing the same tasks as their 3.5-tonne diesel counterparts – the extra weight is in the battery, not the payload.

“While electric car adoption continues to accelerate, the eLCV market is playing catch-up. Regulatory alignment is long overdue if we’re to close that gap and support wider commercial EV uptake.

“Elsewhere, public charging VAT remains at 20%, compared to 5% for home charging – a disparity that penalises drivers without access to off-street parking, many of whom rely on used EVs in the second-hand market.

“This is compounded by the expensive car Supplement, which adds an additional annual charge to new EVs priced over £40,000 – a threshold that captures a significant proportion of the market. To reflect today’s vehicle pricing, this threshold should be raised to £60,000 for EVs.

“These additional costs undermine the appeal of second-hand electric vehicles and stall progress on wider adoption.

“We need a longer-term tax roadmap to support confident decision-making and sustained EV growth.

“The fleet sector is ready to lead the charge, but this Spring Statement was a missed opportunity to deliver the consistent, joined-up policy needed to match the ambition.”

John Cassidy, managing director of sales at Close Brothers Motor Finance, says that the decision not to reverse plans to apply VED to EVs from April will be “a difficult one to stomach for motorists”.

He said: “Private demand is not where it needs to be as the initial costs of EVs, poor charging infrastructure and concerns over electricity bills put prospective buyers off. Applying VED to EVs provides one less incentive for buyers to make the switch. 

“This will also make the Government’s targets, such as the zero emission vehicle (ZEV) mandate and the proposed 2030 ban on new petrol and diesel vehicles, harder to achieve.”

However, Ian Hughes, CEO of Zenith’s corporate and consumer divisions, said: “Today’s forecast provided a welcomed period of stability, with no news being good news. 

“With the previously announced vehicle excise duty increase for EVs and the expensive car supplement due to come into effect on 1 April, drivers will be relieved no further tax changes were announced today. 

“We look forward to hearing the results of the most recent zero emission transition consultation as the Government acts on industry insight to further support the transition." 

Vicky Edmonds, CEO of EVA England, says it was encouraging to see mention of the Planning and Infrastructure Bill as a key motivator for growth. 

“This is a crucial opportunity to address planning barriers electric vehicle charging infrastructure and we hope the Government uses it to make it easier for all drivers to access charging solutions,” explained Edmonds.  

“But this statement was also an opportunity to address prevailing cost barriers preventing the everyday driver from switching to electric. Increasing the expensive car tax threshold for EVs should have been a priority while they remain on average more expensive than their petrol and diesel counterparts. 

“We hope EVs as a key sector for growth will be at the forefront of the Chancellor's priorities in the forthcoming Spending Review.”

Matt Walters, head of consultancy services and customer value at Ayvens, wasn't expecting many significant announcements from the Chancellor in the Spring Statement and said that, against a backdrop of cuts to benefits and Government spending, motorists should perhaps be glad to avoid any unexpected rises in today’s announcement.   

“New cars bear the brunt of next year’s tax changes, and it was concerning that the Chancellor hasn’t delivered on a key promise from the Autumn Budget,” he added.  

Sarah Whiteside Jones, director of membership engagement and public affairs, at the Institute of the Motor Industry (IMI), said: “Continued dialogue will be key if we are to continue to support the automotive sector and its skilled workforce, not just for today but for the foreseeable and technologically advanced future.

“Today’s Spring Statement offers reasons for optimism but there is much to be done.

“We look forward to working with policymakers, through existing and new channels, to ensure that the automotive sector is at the forefront of skills development, technological innovation, and economic growth.”

Point S managing director, Ali Yilmaz, said: “With recent increases in vehicle excise duty and the Chancellor's decision not to halve VAT on new EV purchases, we anticipate motorists will keep their existing ICE vehicles for longer, creating several opportunities for aftermarket businesses. 

“We’re already witnessing hesitation in the new car market with a 3% contraction across Europe as uncertain consumers postpone vehicle purchases.

“This trend, combined with no additional funding for pothole and road repairs, means the UK car parc will continue to age and experience greater wear and tear. 

“However, with household budgets remaining tight, independent aftermarket businesses must demonstrate to customers the value of investing in preventative maintenance and repairs for their safety and that of other road users.”

Giving a logistics perspective, Road Haulage Association (RHA) managing director, Richard Smith said: “As a sector that contributes £13.5bn to the UK economy each year, our industry is crucial to achieving that growth, it’s promising to see the Government continue to recognise the need for reform of the planning regime and the time it takes to secure planning permission for major infrastructure projects.

“On infrastructure, the Government’s acknowledgement that critical infrastructure underpins economic growth is welcome.

“It's why we urged the Government in our Spending Review response to prioritise investment in road infrastructure projects that have the best business case for delivering growth – projects like the Lower Thames Crossing which we welcomed the approval of yesterday.

“Further investment in nationally significant infrastructure projects now needs to happen if Government is going to deliver on house building targets, reduce congestion, improve journey times and connect our towns and cities.”

With Government planning reforms leading to 170,000 additional homes built over the forecast period, he added: “Our industry will be crucial to meeting the aim of building new homes. The road freight and logistics sector is vital to moving the materials to achieve these ambitious housebuilding targets.

“Every new home is a new delivery point – so more homes must be matched with the increase in logistics premises and land allocation to service these homes.

“More investment will be required too in skills to train up and retain the 40,000 drivers a year that the country needs. Building the foundations for a future workforce will be an essential part of delivering on these aims and future proofing the economy.”

Paul Holland, managing director for UK/ANZ Fleet at Corpay, including UK brands, Allstar and Keyfuels, said: “Chancellor Rachel Reeves has delivered her Spring Statement and at the time of writing our concerns that there would be little in the way of meaningful relief has now come true.

“From navigating rising fuel prices, energy market volatility and changes in international trade policies, there is a lot for businesses to contend with when it comes to operational matters.

“While we called for action in recognising these material pressures, our focus must revert to imminent updates set to come into force and where businesses must be prepared.”

He added: “We need clear direction and an update in the government’s sustainability strategy, principally for zero emission vehicles (ZEVs) - particularly as the Government is unmoved on its commitment to ending the sale of combustion engine cars by 2030 and ensuring all new cars and vans are 100% zero-emission by 2035.

“Without clarity, we as an industry, must continue to provide solutions that drive cost and time savings for businesses that are navigating a shifting world.”

Rob Whiteside, CEO of EmpowerRD, told Fleet News: “We would have welcomed greater attention given to UK small businesses in the Chancellor’s Spring Statement.

“It was only recently that the British Chamber of Commerce announced that it expects the UK economy to grow by just 0.9% in 2025. 

“There is a clear solution to this problem: SMEs – a community that is the backbone of our economy – need greater support to drive innovation and long-term growth.

“We welcome the Government committing to helping HMRC crack down on tax evasion, potentially generating an additional £7.5bn in revenue, and feel some of these funds could unlock further resources to support SMEs.

“Research-driven innovation is essential for businesses to navigate challenges and contribute to a more dynamic and resilient economy, but Government incentives must be more accessible and effective in practice. 

“HMRC’s R&D tax credits scheme has played a key role in supporting SMEs, but some businesses still struggle with the complexities of the process. 

“By further enhancing and refining these initiatives, there is an opportunity to ensure that even more innovative businesses can benefit, supporting productivity, job creation, and economic resilience.

“We hope to see continued discussions around how best to support SMEs through simplified access to innovation incentives, greater awareness, and policies that empower businesses."

Tom Clougherty, executive director of the Institute of Economic Affairs, said: “The Chancellor is right to cut spending rather than raise taxes again, and the cuts she has made are welcome. 

“There is, nevertheless, a sense of unreality about all this. Policy is being determined by an arbitrary, moving target – a fiscal rule – rather than with any long term, principled strategy in mind. 

“When you look at the sluggish growth forecasts, and the enormous liabilities the state will encounter as the population ages, Britain's cycle of fiscal events feels a lot like rearranging the deck chairs on the Titanic. 

“Turning increased defence spending into an exercise in 'modern industrial strategy' suggests that the government still has too state-centric a view of economic growth – one that is almost certain to disappoint in the long-run. 

“Ultimately, we are going to need much more fundamental reform – going further and faster on the deregulatory, supply-side measures the Government has begun to talk about; lifting the self-defeating burdens that have been imposed on business; and taking a long, hard look at what the state does and how it is funded.”