If the industry wants to survive, it should stop making bad cars nobody wants to drive. It appears to want subsidies instead.

When the electric vans startup Arrival announced that it was seeking to focus its business on the US market, it seemed like a good move. Biden’s Inflation Reduction Act was offering massive subsidies for the green industries of tomorrow; the market would surely surge, and Arrival’s fortunes with it.

They did not. The “British Tesla” as it was once known, which was valued at over £10 billion on the Nasdaq at one point, has seen its UK arm enter administration. It follows that other darling of green industrial policy, Britishvolt, which collapsed last year (it was later bought by Recharge Industries). The Telegraph has the story.

It has been clear for a long time now that electric vehicles have run up against one of those concrete blocks the automotive industry uses in crash tests. In spite of huge subsidies over the years, and a tax regime which continues massively to favour owners of electric cars over petrol and diesel ones, the motor industry still struggles to shift its wares.

Last year, for the first time, the market share for pure battery-powered cars fell back for the first time, from 16.6 per cent in 2022 to 16.5 per cent in 2023. Private buyers lost interest a while ago, and now fleet buyers are losing faith too: the US arm of car rental firm Hertz recently announced it was planning to sell off a third of its electric vehicle fleet and reinvest in petrol.

In a sane world, this would be a signal for manufacturers to cut back production. Unfortunately, the Government thinks otherwise, and since 1 January manufacturers have been under a mandate to make sure that at least 22 percent of the vehicles they sell are zero emission, a proportion that is due to rise to 80 percent by 2030. Fail, and they face stiff fines.

Given that people don’t want to buy these cars, it’s causing a considerable headache. The preferred solution of the car industry, of course, is simple: ask the Government for more taxpayer-funded handouts.

Industry figures are already complaining that grants for plug-in cars, which at their height offered bungs of up to £4,000 per vehicle, were phased out in 2022. They should consider, however, that electric cars continue to enjoy substantial fiscal incentives. Buy a litre of petrol and around half of what you pay is tax; charge your EV at home and all you pay is 5 percent VAT. Electric cars won’t even be liable for road tax until next year – after years of using the roads for free.

Read the full story here.