Government Rejects Calls to Reinstate Electric Car Grant
The UK government has dismissed requests from the automotive industry to reintroduce the electric car grant in an effort to boost the adoption of electric vehicles (EVs). The plug-in car grant (PiCG), which provided subsidies for the purchase of EVs, was phased out in 2022 after being downgraded multiple times since its inception in 2011. Despite growing calls to reinstate the grant, the government remains firm in its decision.
The rejection of the grant comes at a time when electric car demand is faltering, raising concerns about the ability to meet the government’s target of banning new combustion car sales by 2035. The ZEV mandate, which requires car manufacturers to sell a certain percentage of electric cars in the UK, further emphasizes the need for incentives to boost demand.
Industry leaders, including Fiat UK boss Damien Dally and SMMT CEO Mike Hawes, have criticized the government’s lack of action in incentivizing consumers to switch to electric vehicles. They argue that without financial incentives, there is no motivation for consumers to make the switch. Volkswagen Group UK managing director Alex Smith also supports the reintroduction of grants, stating that they would be a sensible means of signaling the importance of decarbonizing road transportation.
In response to these calls, the government highlighted its past efforts to reduce the up-front purchase price of EVs through grants. It cited a public evaluation report that showed the plug-in car grant played a vital role in building the early market for electric vehicles but had less impact on demand compared to other price incentives. The report also noted that the price gap between EVs and internal combustion engine vehicles has been decreasing in recent years. Industry data suggests that by the end of the 2020s, some EVs could be priced similarly to petrol or diesel cars.
While the government remains steadfast in its decision not to reintroduce the grant, it acknowledges the need for targeted incentives and value for money. Plug-in grants will continue to be available for motorcycles, vans, taxis, trucks, and wheelchair accessible vehicles until at least the financial year 2024/25.
The government also rejects the suggestion to incentivize the purchase of second-hand EVs through financial measures, citing industry intelligence that shows used EVs are now comparable in price to petrol and diesel equivalents. The number of used EVs is rapidly increasing, and the government is working with stakeholders to address any potential barriers to their uptake.
In addition, the government will not reduce the percentage of VAT applied to public EV chargers or introduce ‘totem signs’ displaying real-time charging prices at motorway service stations. Instead, efforts will focus on improving real-time charger information accessibility through maps and apps.
The government’s decision not to reinstate the electric car grant may disappoint industry leaders and advocates for EV adoption. However, the government argues that its current incentives and decreasing price gap between EVs and internal combustion engine vehicles are sufficient to drive the transition to electric vehicles.