UK motorist organisation the Royal Automobile Club (RAC) has called for the UK government to suspend Value Added Tax (VAT) on electric cars in order to stimulate consumer demand and encourage investment in the UK’s green automotive industry.

The standard rate of VAT applying to cars sold in the UK is 20%.

The call is made from motoring journalist Quentin Willson’s 'Drive the Future' green motor show held this week at Motorexpo in London’s Canary Wharf.

Willson says: “While the [UK] government gives GBP5,000 grants for EVs, they’re still far too expensive. Clawing back thousands of pounds of that grant in VAT isn’t helping. We need to create demand among consumers and confidence for investors. The UK must lead the world in green car technology before the Chinese beat us to it.”

Suspending VAT on electric car sales would reduce some showroom prices by as much as GBP5,000 and bring the cost of EVs closer to conventional cars, it is argued.

Adrian Tink, strategist at the RAC, says: “This is about making green cars more affordable, creating jobs, cleaning our air and giving drivers’ confidence to make more fuel-efficient car-buying choices. The RAC strongly support this call for action.”

The RAC says that suspending VAT on Vauxhall’s ground-breaking sub-40g/km of CO2, range extendable Ampera, would make its price comparable to a 2.0 litre Ford Mondeo.