The electric car grant to make expensive battery-powered vehicles more affordable was immediately cut by 40 per cent to just £1,500 in a surprise announcement today.
It is the second time in just nine months that the grant amount has been reduced and the move from the Government this morning will enrage both prospective buyers and the motor industry.
The scheme was slashed to just £1,500 as of 7am, down from the £2,500 amount it was lowered to in March. Before that it stood at £3,500.
Eligibility for the scheme has also been made more restrictive, with the grant now only available for pure EVs capped at £32,000 – down from £35,000 previously – with manufacturers given no forewarning that some of their battery models are priced out with immediate effect.
Grants for new electric cars have been slashed by 40% to ‘enable taxpayers’ money to go further´, the Department for Transport said in a shock announcement this morning
DfT stated that the new changes would allow “the scheme’s financing to go further and help more people make switch to an Electric Vehicle” and this is despite cuts. Investments by the government in transitioning to electric cars “remain unchanged”.
Trudy, the Transport Minister for Ireland said that “The market is moving forward in switching to electric cars.”
This, along with an increasing number of new vehicle options and increasing customer demand, has led to us focusing our vehicle grant funds on less expensive vehicles. We also reduced the grant rate to increase the benefits for more people, while allowing taxpayers to spend more.
The announcement came at a time motorists are experiencing rising costs.
Drivers are currently experiencing record-high prices for both fuel – with petrol at an average of £1.46 per litre today – and second-hand cars, which are some 28 per cent more expensive on average than they were a year ago.
The industry bosses said that Omicron restrictions could have been imposed in just weeks and would cause financial hardship for many more.
The fresh cuts to the electric car grant also comes in the wake of the introduction and expansion of emission taxation zones in Birmingham and London respectively, which are designed to push drivers to replace their older petrol and diesel cars with greener vehicles – else face daily charges.
For owners of non-compliant cars entering Birmingham’s new Clean Air Zone from June, this means a charge of £8 per day.
For those driving into the capital’s Ultra Low Emission Zone – which was expanded to 18 times in size in October and now incorporates a huge chunk of residential London – the daily rate is £12.50.
Electric car grant has been slashed to just £1,500 as of 7am, down from the £2,500 amount when it was last cut in March. According to motor industry leaders, the reductions came as a surprise.
Today, motor industry insiders accused MPs’sending mixed signals’ about EVs. It was particularly before the ban on diesel and petrol cars starting in 2030.
Jim Holder, editor at What Car? said that:[The Government] wants to promote environmentally-friendly transport, yet it is reducing the incentive to do so at a time when electric cars are still more expensive to buy and represent a minority in the new car market.’
Mike Hawes, chief executive at the Society of Motor Manufacturers and Traders described the move as a ‘blow to customers looking to make the switch’ and that it ‘couldn’t come at a worse time, with inflation at a ten-year high and pandemic-related economic uncertainty looming large’.
He said: “Industry ambitions for decarbonised roads transport are high. Manufacturers deliver ever higher quality products.
‘But we need to move the market even faster – from one in a hundred cars on the road being electric, to potentially one in three in just eight years – which means we should be doubling down on incentives.
“Other international markets have already done so, while we are cutting. This is despite expecting the industry will subsidise our transition and raising prices for customers. The UK’s drivers could be left behind in the shift to zero emission motoring.
Electric car grant cuts couldn’t come at a worse time, with inflation at a ten-year high and pandemic-related economic uncertainty looming large
Mike Hawes Chief Executive, SMMT
Edmund King, president of the AA, said many drivers will now have to work out if they can still afford their chosen EV now that the grants and threshold have been cut.
According to him, MPs could be wrongly interpreting electric car demand. This is probably due to generous salary sacrifice plans, where 1% benefit in kind taxation.
He stated that it was counterintuitive for incentives to be reduced with ambitious goals heading into 2030, but that he accepted the fact of higher assistance needs among those who purchase EVs lower in value.
‘Drivers tell us the biggest barrier to EV ownership was the initial price. We are pleased to see an increase in EV sales this year. However, this is mainly due company car purchases as well as salary sacrifice programs.
He added: ‘The most effective method of encouraging mass electric car adoption is to scrap the VAT – a policy we have called for since 2020. According to low income households, this will be the greatest help in switching away from fossil fuels.
The decision to raise the cost of EVs to purchase was made by motor industry executives. With inflation at a ten years high, and pandemic-related uncertainty looming large, it ‘could not have come at a better time.
RAC: Electric car grant cuts are a’step too soon’
Vehicles with less than 50g/km CO2 emissions and vehicles that are capable of traveling at least 70 miles using zero emission power can apply for the PiCG.
Although a plug in hybrid might technically qualify, a PHEV-powered model cannot meet the criteria and is therefore only eligible to pure EVs.
This grant helped subsidise approximately half a million vehicles with low emissions over the course of a decade.
Launched in 2011, it originally offered to pay £5,000 toward the price of a new electric car to reward early adopters making the switch to green vehicles.
But it has been reduced on multiple occasions since, with the last cut in March knocking the grant amount down to £2,500 and eligibility reduced to only cars costing up to £35,000 – pricing every Tesla and many other vehicles out of the scheme.
Since 2018, MPs warned that any grants for electric cars would be reduced as zero emission vehicles become more common and government incentives less needed to get people out of their diesel and petrol cars.
Today’s cuts – a further £1,000 off the subsidy and lowering the eligible vehicle price by another £3,000 – mean that around just 20 models will now qualify to the grant at a period when EV take-up is at record levels.
The number of new zero-emission vehicles sold this year is up by 89 percent compared to 2020.
The UK has sold 162,022 complete battery-electric vehicles so far in 2021. They account for nearly one out of ten new cars this year.
RAC head of roads policy Nicholas Lyes said: ‘While it’s true that sales of electric vehicles have been growing strongly, it’s worth noting that this is still from a relatively low base. We’re concerned the Government has taken this step too soon.’
Not only will the cuts affect automobiles, but also other aspects of life.
Maximum grants for electric motorcycles and mopeds was £1,500, but this has been cut to £500 for the former and £150 for the latter, the DfT said today.
Large electric vans are now eligible for a grant of up to £5,000 – down from £6,000 – with the support for small vans falling from a maximum of £3,000 to £2,500.
Wheelchair-accessible electric cars will continue to benefit from the previous rate of a maximum £2,500 grant on vehicles costing up to £35,000.
The Government will be accused of publishing its further grant cuts announcement under the cloud of Covid news. However, it has pledged to implement new rules next year that increase confidence in charging infrastructure.
A minimum standard for payment – such as contactless – will be required for new 7.1kw and above charge points, and motorists will soon be able to compare costs across charging networks in a ‘recognisable format’ similar to pence per litre at petrol stations.
Trudy Harrison, Transport Minister said that he wanted as many people to switch to electric vehicles as possible. Therefore, he also announced new rules for making it simpler to pay and find charge points.
“This will increase confidence among drivers in charging infrastructure. We are working to cut carbon emissions and create green jobs.
MOTORING: SAVE MONEY
