Car dealers suffer 'noticeable drop' in EV demand after Rachel Reeves' new tax move

Car dealers are noticing a "drop" in interest for electric vehicles after Rachel Reeves' confirmed plans for a new EV pay-per-mile road tax charge. Reeves' confirmed plans for a 3p per mile electric Vehicle Excise Duty (eVED) charge from 2028, with the fee developed to offset the loss of petrol and diesel fuel duty fees.

The controversial fee was questioned by the industry, with fears the move was likely to put off customers and lead to a reduction in electric car sales. The Office for Budget Responsibility predicted as many as 440,000 fewer electric vehicles could be sold under the plan.

And the predictions appear to have come true with dealers admitting they have already noticed a change, with still two years to go until eVED comes into effect. Fraser Brown, Managing Director of MotorVise, a consultancy firm working closely with hundreds of car dealerships across 39 car brands in Europe, admitted customer concerns are already stark.

Speaking exclusively to Express.co.uk, Fraser said: "Since the announcement of the 3p per mile charge, we've seen a noticeable drop in EV enquiries, which is beginning to show in registration figures. We're already seeing early signs in more cautious buyer conversations.

"Car purchasing decisions are driven largely by affordability and perceived future costs. Even if a charge is years away, customers factor it into today's monthly payment mindset. Dealers are fielding more questions about long-term taxation and running costs than they were previously."

Robert Forrester, Chief Executive of Vertu Motors plc, slammed Reeves' new tax charge as an "ill-thought-out" policy, telling Express.co.uk that increasing taxes was "clearly" going to reduce demand. Although he said he sympathised with officials for needing to replace fuel duty, he called for the introduction of a simple flat fee instead of charging by the mile.

Last month, data from the Society of Motor Manufacturers and Traders (SMMT) revealed that electric car sales had slowed, with numbers up just 0.1% in January. More importantly, EV market share dropped to just over 20%, massively down on the Government's target of 33% by the end of the year.

John Cassidy, Managing Director at Close Brothers Motor Finance, a leading car finance provider, feels sure the drop in EV market share just weeks after Reeves' Autumn Budget announcement could be linked.

John told Express.co.uk: "While it could be a mixture of [coincidence and cause], there is a definite cause. It's no surprise to see stalling figures in light of the new tax, as prospective EV drivers have less motivation to make the switch."

They predict that the new charge would "hamper demand" and would likely be an "unnecessary barrier to prospective car buyers".

Speaking to Express.co.uk about the data. SMMT Chief Executive Mike Hawes explained: "Almost a quarter of all new cars bought in Britain last year were EVs. January 2026 was down on the back of a strong end of year performance but the year will undoubtedly see further growth.

"The pace of that growth, however, is still not fast enough to meet government ambition, with drivers needing every encouragement to switch."