The forecast for UK electric vehicle sales in the coming years has been halved on the expectation that higher interest rates will dampen demand, the Office for Budget Responsibility (OBR) has said.
Roughly 38 per cent of new car sales in 2027 will be electric vehicles, down from a previous March forecast of 68 per cent, the OBR said today.
The OBR said that higher upfront costs of electric models, relative to fossil fuel-powered cars, would disincentivise consumers from buying them. This was especially the case for purchasers using car finance “as interest rates are significantly higher than we had anticipated in 2022.”
The recent fall in the price of diesel and petrol also reduces the cost advantage of electric vehicles, the OBR added.
Steep sales growth over the past few years is therefore “expected to slow,” it added.
The body also highlighted issues surrounding the availability of public charging points.
Ian Plummer, commercial director at Auto Trader, said: “Lack of public charging, whether that’s perceived or not, has been a major barrier to consumer adoption of electric vehicles.”
But Plummer added that government plans to loosen planning restrictions, announced in the Autumn Statement today, will help the broader roll out of chargepoints – a move he said “has the potential to really drive consumer adoption of these cars.”