Plug-in car grant axed

DASHBOARD PLUG-IN CAR GRANT AXED AS FOCUS TURNS TO IMPROVING CHARGING NETWORK

• Grant that gave new EV buyers £1,500 discount on cars costing less than £32k ends • Government says it will ‘refocus’ funding on improving charging network • Sudden announcement sends shock waves through the industry • Comes off the back of two large reductions in the scheme last year

by James Batchelor

@JRRBatchelor

The government has axed the plug-in car grant, claiming it has had little effect on the current explosion in new electric car sales.

In an out-of-the-blue move that sent shock waves through the industry, the Department for Transport (DfT) announced on June 14 that the scheme – which gave a £1,500 discount on cars costing less than £32,000 – would be immediately closed to new car orders.

It comes as full-electric car sales have risen by 70 per cent in the past year.

The DfT said the funding would now be ‘refocused’ on the ‘main barriers in the EV transition’, namely public charging.

The grant is only ending for cars, however, and doesn’t affect plug-in taxis, small and large trucks and vans, mopeds, motorcycles and wheelchair-accessible vehicles.

The DfT reiterated that the plug-in grant for cars was always ‘temporary’, and that despite reductions in the grant offered and the number of cars it covered, [the reductions] ‘have had little effect on rapidly accelerating sales, or on the continuously growing range of models being manufactured’.

Electric cars sold by dealers via the scheme two working days before the announcement will still qualify.

Transport minister Trudy Harrison said: ‘With billions of both government and industry investment continuing to be pumped into the UK’s electric revolution, the sale of electric vehicles is soaring. We are continuing to lead the way in decarbonising transport, with generous government incentives still in place, while creating high-skilled jobs and cleaner air across the UK.’

The Society of Motor Manufacturers and Traders (SMMT) was dismissive of the news, though, saying the move gave ‘the wrong message’.

INDUSTRY TALK

ELECTRIC CAR PRICES NEED TO COME DOWN

THE UK’S adoption of electric cars is so far impressive, but in order to make them accessible to everyone we need prices to fall, so we’re disappointed the government has chosen to end the grant at this point.

If costs remain too high, the ambition of getting most people into electric cars will be stifled.

Nicholas Lyes

Head of policy, RAC

People have saved more than £1.4bn thanks to the grant

‘The decision to scrap the plug-in car grant sends the wrong message to motorists and to an industry which remains committed to government’s net zero ambition,’ said chief executive Mike Hawes. ‘Whilst we welcome government’s continued support for new electric van, taxi and adapted vehicle buyers, we are now the only major European market to have zero upfront purchase incentives for EV car buyers, yet the most ambitious plans for uptake.

‘With the sector not yet in recovery, and all manufacturers about to be mandated to sell significantly more EVs than current demand indicates, this decision comes at the worst possible time. If we are to have any chance of hitting targets, government must use these savings and compel massive investment in the charging network, at rapid pace and at a scale beyond anything so far announced.’

Government figures show that since being introduced in 2011, the plug-in car grant has provided more than £1.4bn in savings.

As of December 2021, it offered a discount of £1,500 on cars costing £32,000 or less, and meant fewer than 25 EVs qualified.

That reduction was widely lambasted by dealers and car manufacturers, with one retailer telling Car Dealer at the time: ‘Can they make this any harder for us?

‘It’s absolutely shocking they’ve done this. Yes, electric car sales are up but this is a kick in the teeth.’

The rules had been changed in March last year, cutting the threshold from £50,000 to £35,000 and the subsidy from £3,000 to £2,500.

At the time, the SMMT had called for the plug-in car grant to be preserved, while December’s cut prompted AA president Edmund King to call for VAT on EVs to be cut rather than subsidies.

PUSHING US FURTHER TO TWO-TIER NATION

DISAPPOINTING – BUT NOT VERY SURPRISING

ELECTRIC cars are already out of reach for many hard-working families and I fear this pushes us further down the road to becoming a two-tier nation when it comes to ownership.

As the government points out, sales have risen by 70 per cent in the last year and now represent one in six new cars joining UK roads.

But dig a little deeper and those figures reveal that a large proportion are registered to business users benefiting from financial incentives including salary sacrifice schemes and low benefit in kind taxation.

This grant made a big difference to many hard-working families and removing it seems short-sighted, particularly as the Scottish government announced last week that £28m will be made available as part of the Low Carbon Transport Loan scheme, giving drivers up to £28,000 in interest-free loans for a new electric car and up to £20,000 for a second-hand one.

IT’S disappointing that at a time of rising costs of living one of the headline-grabbing incentives to encourage new car buyers to make a switch to a more environmentallyfriendly form of transport is being removed.

However, the damage done is likely to be more from the headlines, reaction and sentiment shift than in actual sales. The truth is that the grant had been whittled down to a point that it applied to only a minority of electric cars on sales – the power of the incentive was that it helped encourage people to explore the benefits of electric cars, possibly more than it helped them buy them.

Today’s decision tells us that the government believes the current crop of electric cars is good enough to sell at a market rate.

The fact that What Car?’s Car of the Year, the Kia EV6, is fully electric and that we have numerous five-star-rated electric cars in our reviews suggests that is a reasonable position to take. That is a testament to the huge amount of investment made by manufacturers into electrification in recent years.

Ginny Buckley

Founder and CEO, Electrifying.com

Jim Holder

Editorial director, What Car?