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Government ends electric car subsidy

Immediate end to plug-in car grant will put prices of cheapest new electric cars up by £1,500. Or will it?

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The UK government has announced this morning that it is ending the plug-in car grant (PiCG) with immediate effect, which basically means that prices of the cheapest new EVs should now increase by £1,500.

The plug-in car grant has been around for more than a decade, introduced back in 2011 to provide a subsidy of up to £5,000 on any new electric car. The plan was always for the subsidy to reduce over time as the price of electric cars (and, initially, plug-in hybrids) came down until it eventually ended.

This happened in a number of reductions of £500 or £1,000 every few years. For the last year or so, the level has been set at £1,500. Along the way, subsidies for plug-in hybrid vehcles was dropped and the maximum price threshold for eligible cars was steadily reduced to concentrate the money on more affordable EVs rather than luxury models.

Which new cars are affected?

Today’s news means that several cars will theoretically become £1,500 dearer. These include:

Will these prices go up immediately?

The grant has been ended with immediate effect, which means that the price of any of these cars should be £1,500 dearer today than they were yesterday. However, there are two things that may affect this.

Firstly, if you’ve been looking at one of these cars at your local dealership but not yet signed on the dotted line, chances are that the dealer or manufacturer will offer to cover the cost of the price rise as an unofficial ‘goodwill gesture’.

Secondly, it should be noted that manufacturers have tended to drop their prices whenever the goverment has previously reduced the plug-in car grant. Assuming that the same will happen again, at least some of the above cars will shortly see their recommended retail prices reduced by up to £1,500.

Assuming that one or both of the above happen (and it’s been the case every single time the grant has been reduced previously), the overall impact on car buyers will be less than you might expect.

Is there any good news to soften the blow?

Yes, there should be. Obviously, if you were planning to buy one of the cars above in the next few weeks then it may have just got dearer. But if you’re thinking about switching to an electric car in the next few months or years, then it’s potentially good news.

The government has said that money saved from scrapping the plug-in car grant will be redirected into improving public charging infrastructure. This is good news for all consumers, as a lack of on-street charging is now probably the biggest barrier to broader EV adoption.

Spending money on charging infrastructure also benefits all electric car owners, particularly used car buyers who have never enjoyed a government handout anyway, rather than just new car buyers.

Are any vehicles still eligible for a grant?

Not consumer passenger vehicles. The plug-in car grant will still continue for light commercial vehicles (like delivery vans and taxis) for the time being. This is a good thing as these vehicles tend to do a lot of driving in built-up urban areas and are traditionally powered by diesel engines.

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Stuart Masson
Stuart Massonhttps://www.thecarexpert.co.uk/
Stuart is the Editorial Director of our suite of sites: The Car Expert, The Van Expert and The Truck Expert. Originally from Australia, Stuart has had a passion for cars and the automotive industry for over thirty years. He spent a decade in automotive retail, and now works tirelessly to help car buyers by providing independent and impartial advice.