On 14 June 2022 the UK Government ended, “with immediate effect”, grants worth £1,500 to subsidise electric cars. The funding will instead be “refocussed” towards improving the UK’s charging infrastructure and on providing grants for other vehicle types.
How did the plug-in car grant work?
The grant was provided to motor retailers and manufacturers which was then applied to the sale price of the vehicle.
Why has the Government removed the grant?
Many motoring organisations have long said that more investment needs to be funnelled into the UK’s charging infrastructure. There needs to be more charge points available and these ideally need to be rapid chargers. So the Government plan to do just this and redirect funds towards increasing the roll-out of chargers. They are also looking at using funding for grants towards other zero emission vehicles such as vans, taxi’s and motorbikes.
What impact will removing the grant have?
To answer this question we need to look at the bigger picture. The Government seems to be very confident in the market doing its job. There is strong demand for electric cars with now almost 800,000 on the UK’s roads. There are also more affordable models on the market. So Government thinks we are passed the point where a cash incentive is needed for electric cars.
The removal of the grant will probably have little affect on the surge in sales of EVs. But it may postpone those on lower incomes to make the transition sooner, if at all. The fact is new and used petrol and diesel models are still cheaper than EVs.
What are the Government’s longer term plans?
The Government are looking to implement an electric vehicle mandate. This will force manufacturers to make sure that a proportion of the vehicles they sell in the UK are electric. So rather than focus on demand for EVs the Government will be forcing higher levels of supply. The economics behind this are clear – for manufacturers this will encourage lower prices and potentially more choice will be needed to compete and sell their cars. The problem with such a policy is how this can operate if there remain problems in sourcing the materials and parts needed – as is the case currently.
What’s the industry’s reaction?
Motoring organisations feel that removing the grant sends out the wrong message to motorists and the timing is poor given the cost of living crisis. The manufacturing trade body, the Society of Motor Manufacturers and Traders (SMMT) pointed out that “the UK is the only major European market to provide no up front purchase incentive for EV car buyers yet the most ambitious plans for uptake”.