“Today’s Budget delivers a complex mix of measures for an automotive industry already navigating intense disruption.
“While the continued freeze on fuel duty, expansion of the electric car grant, and increase in the ECS threshold for electric vehicles offer welcome news, the Budget falls short of the boost many had hoped for. A significant rise in Vehicle Excise Duty brings bad news for consumers and the industry alike, while the proposed ‘pay-per-mile’ scheme risks tempering momentum in EV sales at a time when the UK market remains fragile and the industry is striving to meet Net Zero targets.
“Notably, the higher tax rate for battery electric vehicles compared to the rate for plug-in hybrids could incentivise hybrid purchases over fully electric models—potentially shifting consumer behaviour in the months ahead. These changes will shape how businesses plan, invest, and engage with consumers, with policies affecting electrification costs set to redefine adoption patterns and prompt strategic reviews across the sector.
“Against this backdrop, the industry faces a delicate balancing act: managing disruption while accelerating the transition to electrification. UK manufacturers continue to grapple with high energy costs, skills shortages, and supply chain fragility. To remain competitive, leaders must prioritise targeted skills investment, operational efficiency, and modernised manufacturing practices.”