Electric car discounts now ‘unsustainable’ amid record price cuts

Carmakers are racing to sell more EVs to meet net zero targets brought in by the Government in January.

Under the so-called zero emissions vehicle (ZEV) mandate, 22pc of all the cars sold in the UK this year must be electric. 

The target then rises annually until it reaches 80pc in 2030, before a total ban on new petrol car sales in 2035.

However, manufacturers including Vauxhall owner Stellantis have complained that the targets are outpacing consumer demand. 

That has prompted Stellantis and rival Ford to warn they could be forced to restrict sales of petrol cars in Britain in order to artificially boost their EV sales figures.

Bosses are also warning that they are not prepared to cut EV prices to unprofitable levels in a bid to boost take-up. 

On Wednesday, the SMMT – which represents the car industry – echoed those concerns, arguing that discounting ultimately “undermines the ability of companies to invest in next-generation technologies”. 

It added: “The market performance underlines the need for the next government to provide private consumers with meaningful purchase incentives.”

It came as overall sales in the car market grew for the 22nd month in a row, with registrations rising by 1.7pc. 

That was the best May market performance since 2021, the SMMT noted, although it remained a fifth below sales levels before the pandemic. 

Sales of petrol cars fell by 2pc but demand for more fuel-efficient hybrids surged.

Standard hybrid sales rose 10pc, while sales of plug-ins were 31pc higher.

Jamie Hamilton, automotive partner and head of electric vehicles at Deloitte, said: “The overall market share of electric vehicles is also well below the required 22pc, as set out in the ZEV mandate. 

“Consumers may have been put off by high interest rates and a squeeze on their spending power due to the cost of living.

“There needs to be more focus on removing the main barriers preventing the average consumer from contemplating a switch to electric. 

“A raft of new low-cost options in the electric vehicle market are expected to land this year which may tempt consumers to make the transition.”