UK slashes electric car grants by £500

Saleha Riaz
·3-min read
The government said the grant will no longer be available for higher-priced vehicles. Photo: Getty Images
The government said the grant will no longer be available for higher-priced vehicles. Photo: Getty Images

The UK's plug-in car grant has been cut from £3,000 ($4,189) to £2,500 and is only available for electric cars costing up to £35,000. The government said it is targeting the grant at affordable models to allow more people to make the switch.

The grant is a discount on the price of new low-emission vehicles and is given to vehicle dealerships and manufacturers.

They will no longer be available for higher-priced vehicles, typically bought by drivers who can afford to switch without a subsidy from taxpayers, the Department for Transport and Office for Zero Emission Vehicles said in a statement.

The auto industry has criticised the decision, with Mike Hawes, CEO of Society of Motor Manufacturers and Traders (SMMT), describing it as "the wrong move at the wrong time."

"New battery electric technology is more expensive than conventional engines and incentives are essential in making these vehicles affordable to the customer,” he said.

“Cutting the grant and eligibility moves the UK even further behind other markets, markets which are increasing their support, making it yet more difficult for the UK to get sufficient supply. This sends the wrong message to the consumer, especially private customers, and to an industry challenged to meet the government’s ambition to be a world leader in the transition to zero emission mobility,” he added.

John Wilmot, CEO, car leasing comparison website LeaseLoco, said that "while no-one expected the free cash offer to last forever, is this really the best time to announce a further cut, at a time when households are tightening their belts?"

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He noted the move will make consumers think twice about switching to electric now over purchasing cheaper new diesel and petrol cars or buying second hand.

The government has said the number of electric car models priced under £35,000 has increased by almost 50% since 2019 and more than half the models currently on the market will still be eligible for the grant, including “spacious family cars,” such as the Hyundai (005380.KS) Kona 39kWh.

It added that measures to encourage people to switch to electric vehicles are also working, with nearly 11% of new cars sold in 2020 having a plug.

This was up from just over 3% in 2019, while battery electric car sales almost tripled over that same period.

Transport minister Rachel Maclean said "we want as many people as possible to be able to make the switch to electric vehicles as we look to reduce our carbon emissions, strive towards our net-zero ambitions and level up right across the UK."

But Wilmot said that "if the government wants to ensure momentum is not lost in its drive towards greener motoring, it needs to be offering more incentives to early switch not cutting the incentives that are already available."

The plug-in vehicle grant scheme was renewed last year, with £582m of funding intended to last until 2022 to 2023.

It was introduced 10 years ago to stimulate the early market for zero emission vehicles. Since 2011, the government has provided close to £1.3bn in grant funding, supporting the purchase of more than 285,000 vehicles.

The government said it is also investing £15bn in alternatives to cars, including buses, cycling, local transport and the rail network.

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