The latest cut in the government’s Plug-in Car Grant has sparked predictable criticism from the UK automotive industry, despite it being precisely in line with long-standing government policy.
The grant, designed to encourage consumers to replace their petrol or diesel cars with electric vehicles (EVs), has been reduced by £1,000, from £2,500 to £1,500. It applies to cars under the price threshold that produce CO2 emissions of less than 50g/km and can travel at least 70 miles with no CO2 emissions.
The price threshold of qualifying cars has also been cut – previously any car with a recommended retail price of up to £35,000 was eligible, now the upper limit is £32,000. The changes came into effect immediately.
Announcing the changes, the government said that the scheme was being re-focused to target less expensive models, allowing the funding to go further and to help more people make the switch to an EV.
“The market is charging ahead in the switch to electric vehicles,” said transport minister, Trudy Harrison. “This, together with the increasing choice of new vehicles and growing demand from customers, means that we are refocusing our vehicle grants on the more affordable vehicles and reducing grant rates to allow more people to benefit, and enable taxpayers’ money to go further.”
The minister added that new rules would also be introduced to make it easier to find EV charge points and to make payments at them.
This week’s reductions are simply the latest changes to the application of the Plug-in Car Grant, which was initially a maximum £5,000 and available for both EVs and plug-in hybrids. It was always intended to reduce over time as the cost of electric cars reduced, and the government has steadily followed that path over several years.
As usual, industry bodies criticised both the changes and the speed of them, just as they have done on every other occasion that the grant has been reduced. Society of Motor Manufacturers & Traders (SMMT) chief executive Mike Hawes argued that the changes could not come at a worse time, “with inflation at a ten-year high and pandemic-related economic uncertainty looming large.”
Vauxhall managing director Paul Willcox claimed that the changes provided a confusing message to UK consumers. “(They) will harm EV adoption at a time when we need to be doing all we possibly can if we are to stand a chance to move the UK to electrified only vehicles by 2030,” he said, adding that EVs still represent only a small percentage of UK vehicle sales.
Other industry observers argue, however, that with plug-in vehicles now claiming 30% of sales figures and growing in popularity each month, there is less need to subsidise the market, while it’s right that any grants available should be targeted at the most affordable EVs.