Written evidence

Written evidence submitted by Volvo Cars (SEV0034)

Overview of Volvo Cars

Volvo Cars is one of the most well-known and respected car brands in the world, and a leader in automotive decarbonisation. Volvo Cars was founded in 1927 and today sells to customers in more than 100 countries. We employ more than 43,000 people and have a presence around the world – headquartered in Sweden, and with production plants in Sweden, Belgium, the United States and Asia.

Volvo Cars has made electrification the centrepiece of our global strategy. Nearly half of the cars we sell worldwide are now electrified, and we ceased diesel production in 2024 in line with our decision to move away from pure internal combustion engine vehicles. We are committed to becoming fully electric, targeting 90-100% electrified sales (BEV & PHEV) by 2030.

Here in the UK (our largest market in Europe and our third largest globally), we have consistently supported ambitious policy outcomes, including having exceeded the ZEV Mandate’s 2024 target.

We welcome the UK Government’s overall commitment to electrification, but inconsistent policies and contradictory messaging have created consumer and industry confusion. To enable a successful transition to electric vehicles, government and policymakers must provide stability and clarity for both consumers and industry.

Government policies such as the Zero Emission Vehicle (ZEV) Mandate and support for charging infrastructure have laid an essential foundation for EV adoption in the UK. The recent Government “Get that Electric Feeling” campaign will also be key in driving demand, presenting clear and factual information to consumers about the advantages of going electric. We are pleased to see the Government take such a positive step to boost demand for EVs and give manufacturers the confidence to invest.

The overall effectiveness of Government policy, however, has been limited by inconsistent signals and a restrictive policy platform. At Volvo Cars, we exceeded the 2024 ZEV targets and grew our electrified sales further in 2025 in the UK. However, overall market uptake falls short of the trajectory required to meet the 2030 & 2035 ambitions, not least as cost holds households back. To accelerate the EV transition, bold and targeted action is needed to build consumer confidence. Volvo Cars supports an early review of the ZEV Mandate alongside stronger consumer incentives and reliable charging infrastructure. An urgent mandate review - promised before Christmas - must deliver regulatory clarity, fiscal support, and practical measures to drive decarbonisation while securing economic growth for the whole sector.

Furthermore, the Electric Car Grant (ECG) requires urgent reform to fulfil its objective of supporting the widespread adoption of affordable zero-emission vehicles. The current eligibility criteria are unduly restrictive, excluding a range of suitable models from environmentally responsible manufacturers. To accelerate the electrification of the UK’s vehicle fleet, it is essential that this policy be revised.

Additionally, the pay-per-mile tax introduced in the Autumn Budget significantly undermines Government efforts. By imposing new costs on EVs to offset lost fuel duty revenue, it shifts from incentives to penalties at the worst possible time. The tax will be introduced in 2028, when new BEV sales need to increase by 28% within two years, according to the mandated target. Our CEO Håkan Samuelsson has publicly warned that this risks stalling consumer confidence just as affordable models like the Volvo EX30 gain traction. The tax contradicts ZEV goals and will slow the rate of consumer adoption. Indeed, the OBR estimates that the tax will lead to 440,000 fewer EV sales by 2030. Furthermore, the eVED places significant burdens on EV consumers who are forced to estimate their mileage, record their driving statistics and send off for rebates or further payments. This is an overwhelming burden on a customer base that requires incentives rather than further challenges.

Repurposing Departmental funds post-Spending Review to help private buyers for a time-limited period as well as extending the ECG, would help both consumers and industry alike, rewarding those companies that have placed sustainability at the heart of their business.

The current rate of EV take-up is encouraging, but it is not yet robust enough to meet the

Government’s targets without further intervention. At Volvo Cars, we strongly support the ZEV Mandate’s overall targets for 2030 and 2035. However, the Government must go further to support uptake.

Recent market data from the SMMT show that battery electric vehicles have grown to account for roughly one in four new car registrations, with particularly strong performance at the end of the year when targets are most in focus. However, over the full year the mandated ZEV share was not consistently met, and internal combustion engines still represent just over half of all new registrations, demonstrating that EVs have not yet become the default choice for most households.

From our perspective, the underlying trend is positive but fragile. Much of the momentum is driven by fleet sales and by substantial manufacturer support, rather than by a broad-based, self-sustaining private market. This makes the current rate of take-up vulnerable to economic headwinds, changing interest rates, and shifts in policy signals.

The cost burden is increasingly falling on industry at the same time as consumers face mixed messages; on one hand, the reintroduction of purchase support, and on the other, the introduction of new EV-specific taxes and additional charges and administrative burdens for EV drivers. Contradictory measures undermine confidence and risk slowing uptake just as volumes need to accelerate.

In our view, the trajectory can still be brought back in line with the Government’s ambitions, but only if current policies are strengthened and made more consistent. That means pairing the ZEV Mandate with a more comprehensive package of consumer-focused incentives, reforming schemes such as the Electric Car Grant and avoiding new measures that effectively penalise EV ownership. Without such changes, the current rate of EV take-up will remain insufficiently robust to deliver on the UK’s targets.

Existing incentives like the Electric Car Grant have provided a helpful nudge toward EV take-up but they remain limited in driving the step-change needed for private consumers due to significant faults in implementation.

The grant requires urgent reform to fulfil its objective of supporting the widespread adoption of affordable zero-emission vehicles. The current eligibility criteria are unduly restrictive, excluding a range of suitable models from environmentally responsible manufacturers.

These flaws mean current incentives fail to reach enough households where upfront cost remains the primary barrier to switching. While private buyer demand recovered modestly last year, it still lags far behind, with growth overly reliant on fleet purchases.

The application process should be improved to allow OEMs to submit supporting evidence at the same time as the original application. This includes Lifecycle Assessments (LCAs) and other environmental and carbon footprint evidence that would avoid the pure use of generic and often inaccurate data to reach a decision. This would save time and resources for both the industry and Government in ensuring that OZEV has all relevant information to accurately consider the application.

The focus should be on supporting vehicles which OEMS can substantively prove have been produced as sustainably as possible, rather than other eligibility requirements.

As a company exceeding ZEV targets with nearly half our global sales already electrified, we view these changes as critical to building a truly self-sustaining EV market in this vital market for us.

The introduction of Electric Vehicle Excise Duty (eVED) risks seriously undermining the UK's EV transition at a critical juncture, sending damaging mixed signals when clear, consistent incentives are urgently needed.

As our CEO Håkan Samuelsson has warned, eVED switches the overall strategy from incentivising EV adoption through policies like the ZEV Mandate to imposing penalties that disproportionately hit private consumers already facing upfront cost barriers. This pay-per-mile tax framework risks eroding consumer confidence just as BEV market share approaches one-in-four registrations. Since VED was extended to zero-emission cars from April 2025, we've seen early signs of hesitation in private demand - despite modest recovery last year - exacerbating reliance on fleet sales and forcing manufacturers to absorb unsustainable £5 billion subsidies.

While we would strongly encourage the Government to reconsider the launch of this scheme, any future rollout must be guided by four principles:

• A) minimisation of the financial impact on households to avoid pricing EVs out of reach;

• B) ringfencing of revenue for road maintenance and charging infrastructure to build trust;

• C) generous exemptions or taper rates for lower-cost models like our EX30 to protect mass market transition;

• D) making the process by which mileage is recorded as user friendly as possible.

As an industry EV leader, we urge Government to reconsider or substantially soften eVED's scope. Government should prioritise a supportive environment that accelerates self-sustaining uptake in our key UK market rather than risking reversal of hard-won progress.

A strong second-hand EV market is vital to the UK's electrification transition, as it dramatically lowers entry costs for private buyers - currently blocked by upfront prices - while boosting residual values that encourage new EV purchases and accelerate fleet turnover.

For Volvo Cars, approved used electric cars drive volume in our largest European market by building consumer trust through industry-leading assurances: 12-month warranties, battery health certificates, 8-year/100,000-mile battery guarantees at 70% capacity, and 30-day exchange rights. This supports our electrification ambitions by delivering the accessible, reliable pre-owned models like the EX30 to the UK market, sustaining growth without sole reliance on new car incentives.

To accelerate this market further, Government should focus on targeted demand-side measures that increase consumer confidence and affordability, including VAT reductions or exemptions for used EVs, time-limited purchase incentives for lower-income households, and the standardisation of battery health reporting to improve transparency.

In parallel, continued investment in reliable public charging, fair electricity pricing and clear long-term policy signals will help normalise EV ownership in the second-hand market, ensuring electrification is not limited to first owners or higher-income buyers.

Purchase costs represent the dominant barrier to consumer confidence in EVs, though price disparity between EVs and ICE vehicles is declining. For many UK households, EVs remain approximately 24% more expensive upfront than comparable internal combustion engine vehicles - a gap exacerbated by running cost uncertainties such as the newly introduced Electric Vehicle Excise Duty (eVED), and the 20% VAT "pavement tax" on public charging that disproportionately burdens urban dwellers without driveways.

While chargepoint availability draws attention, it ranks below cost as a deterrent - 93% of current EV owners charge at home - but equitable public access remains critical for the 40% of households lacking off-street parking. Battery degradation fears and range anxiety can restrict consumer confidence, but are addressed by technological progress, anti-misinformation campaigns and assurances like our Volvo approved used programme, which includes battery health certificates.

Overall, the industry continues to face issues regarding range anxiety. While the number of customers experiencing range anxiety reduced by 23% year-on-year between 2023 and 2024 according to EVA England, fears regarding range are commonly cited in the media and policy circles as one of the main reasons for not choosing electric. However, these are not the concerns of those who drive electric. As per EVA England’s latest report , EV drivers worry more about the cost of charging, ease of payment processes and accessibility. Volvo Cars has taken active steps to improve the range of its fully electric cars to ease such concerns, with our latest EX60 model offering up to 810 km of range and 340 km from just ten minutes of charging.

Government and industry must respond with decisive, coordinated action to build trust. On purchase costs, prioritise fiscal levers: halve VAT on new EVs for three years to close the price gap (projected 15% demand increase per SMMT ), reform the Electric Car Grant to accept OEM-submitted lifecycle evidence upfront and introduce used EV grants modelled on Netherlands, Belgium, and Germany to expand second-hand affordability.

For running costs, equalise VAT on public charging to end the "pavement tax," reverse Expensive Car Supplement inclusion for EVs, and extend low Benefit-in-Kind rates to sustain fleet demand, which drives 77% of ZEV registrations. To enhance everyday appeal and infrastructure equity, scale non-driveway household grants to £700+ per installation, reform workplace schemes for SMEs and public sites like hospitals, and implement proven low-cost perks - bus lane access, free public parking, and toll exemptions - as effectively deployed in Norway.

Policymakers and the Government must improve policy direction and communication to ensure clarity and stability. While manufacturers like Volvo Cars continue to deliver products that meet consumer needs, many would-be EV users are turned away from the sector as they are unsure where Government policy will land in a year’s time. It is imperative that the UK Government deliver consistent and supportive policy, including retaining the ZEV Mandate’s overall targets for 2030 and 2035.

Equitable and affordable public charging remains critical to accelerating the UK's EV transition, especially for the 40% of households without driveways facing a 20% VAT "pavement tax" on public chargers versus 5% for home use . We welcome recent media reports suggesting that HM Treasury is looking at this issue to ease the burden of EV users.

Government efforts to expand charging infrastructure - through recent funding packages supporting cross-pavement technology, public sector fleets, and business depots - build on substantial prior investments and a growing public network and are hugely welcome by industry stakeholders, yet rollout still lags mass-market needs as most owners charge privately.

There are several areas where further reforms would significantly strengthen the impact of existing Government action on charging infrastructure.

First, the tax treatment of public charging needs to be aligned with home charging so that drivers who rely on the public network - particularly those without off‑street parking - are not penalised by higher VAT rates. This would go a long way towards making the transition fairer for urban households as EV adoption moves beyond early adopters. Alongside this, support schemes for home and on‑street chargepoints should be simplified and better funded, with higher grant values and clearer, faster application processes, including explicit support for cross‑pavement and similar solutions that let households without driveways access cheaper domestic tariffs.

Second, workplace and depot charging programmes should be restructured so that more businesses - especially SMEs and public‑sector sites like hospitals and schools - can install meaningful numbers of chargers without prohibitive upfront costs. That means more generous per‑socket support, flexibility to install larger numbers of chargepoints where demand exists, and finance mechanisms that spread repayments over time rather than concentrating costs at installation. This would turn workplaces and everyday destinations into a reliable backbone of the national charging network.

Third, clearer national standards and expectations are needed on the reliability and geographic spread of rapid charging, so that drivers can be confident that chargers will work and will be available not only on trunk roads but also in towns, cities, and rural areas. As a manufacturer with a growing UK EV base and robust battery warranties, Volvo Cars welcomes the progress already made and is ready to work with Government and industry partners to ensure that a fair, well‑designed charging network underpins delivery of the UK’s 2030 and 2035 phase‑out goals.

See above

Experience from other countries shows that early, sustained and clearly targeted Government intervention is indispensable for a successful EV transition. Markets that relied primarily on regulation or manufacturer effort, without enough support for consumers, have seen slower uptake, higher public scepticism and a heavier burden placed on industry. As a proud Swedish company, we have a deep understanding of how to implement progressive EV policies and push the electric transition ahead.

Norway demonstrates the power of a comprehensive and long‑term package of tax incentives and practical benefits. Full exemptions from purchase taxes and VAT for EVs, combined with lower annual circulation taxes and perks such as access to bus lanes, free or discounted parking and reduced tolls, made EVs the rational financial choice for households for many years. Only once EVs became mainstream did Norway begin to phase in more balanced taxation, helping embed EVs in the mass market without derailing momentum.

Continental European examples also highlight the importance of well‑designed, time‑limited incentives tailored to different consumer groups. Germany’s Umweltbonus scheme combined purchase subsidies with tax advantages to stimulate demand, while France’s social leasing model targets low‑income households with affordable monthly EV offers. These approaches show that focusing support on those least able to absorb the cost premium can broaden the transition beyond higher‑income early adopters.

Belgium has rapidly evolved into one of Europe’s most mature EV markets, with electrification largely propelled by corporate fleets and leasing companies. The share of new electric vehicle registrations rose from under 10% in 2020 to 42.7% in 2024 and is expected to exceed 50% in the months ahead. This growth has been underpinned by strong tax incentives, widespread availability of company cars, and an expanding charging network now exceeding 100,000 public charging points. Corporate buyers - responsible for around 85% of new BEV registrations - have led the transition, with three‑quarters of new leasing orders now fully electric.

The overarching lessons for the UK are clear. First, financial incentives must be significant and front‑loaded enough to close the affordability gap in the early to mid‑phase of transition, rather than being removed or diluted too quickly. Second, support must be consistent and predictable, avoiding mixed signals such as new EV‑specific taxes that undermine confidence just as adoption needs to accelerate. Third, consumer‑facing measures - on price, charging access and everyday convenience - must move hand in hand with regulatory tools like the ZEV Mandate and industrial policies that secure investment in manufacturing and supply chains.

January 2026