Ford Asks UK for Subsidies to Boost Electric Vehicle Sales

(Bloomberg) -- Ford Motor Co. is calling on the UK government to reintroduce subsidies to help carmakers hit sales targets as consumers shun electric vehicles.

Chancellor of the Exchequer Rachel Reeves needs to bring back incentives in this month’s budget to stimulate customer demand for EVs, said Lisa Brankin, chair of Ford UK and the company’s managing director for Britain and Ireland.

“There just isn’t customer demand to meet the objectives,” Brankin said in an interview with Bloomberg News. “If it’s going to be a success, we need intervention and the government to do something.”

The UK has introduced rules requiring 22% of new car sales this year to be zero-emission, rising to 80% in 2030. For vans, 10% of new sales must be electric this year, climbing to 70% by the end of the decade. Automakers face fines of as much as £15,000 ($19,900) per vehicle if they fail to comply, but they can avoid penalties by using a credits-trading program and catch up in later years.

Ford won’t meet the 22% target this year, but will use the program’s flexibility to avoid fines, Brankin said.

The government has set “really ambitious” goals, she added. “If they want those things to happen they’ve got to support it.” 

Her plea for support comes as European governments slash incentives and Chinese carmakers push into the region.

Targets

Ford is the latest carmaker to appeal to the UK government for help. Jeep and Vauxhall maker Stellantis NV in June threatened to stop making vehicles in the UK unless the government eases EV sales targets. Brankin declined to be drawn on how Ford would react if the government ignores its plea.

Specifically, Brankin wants the UK to halve value-added tax to 10% over the next three years on battery-electric vehicles, echoing a call by the Society of Motor Manufacturers and Traders lobby group. She also wants lower VAT on street charging — which is currently more than on home charging — to encourage consumers without a driveway to purchase an EV.

The UK government will ban petrol and diesel cars after 2030 but has said it will allow some hybrids to be sold until 2035. It hasn’t yet set out the details of the hybrids policy.

Between January and August, 17.2% of new car registrations in the UK were fully electric, according to SMMT data, short of the 22% target for the full year.

According to Brankin, Ford is lagging as it has electric models that are only launching in 2024. That includes the Explorer SUV which the company is rolling out in the UK after a delay.

Ford will do “all it can” to avoid reducing sales of petrol and diesel vehicles to hit targets, Brankin said.

The UK head of Ford, which sells almost one in three commercial vehicles in Britain, also called on the government to keep the plug-in van grant and corporate tax relief for commercial vehicles.

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