The Government has announced cuts to the Plug-in Car Grant for the second time this year demonstrating a lack of commitment to the future of electrifying vehicles. Given the recent hike in fuel costs, this has not been well-received by car manufacturers and motorists. It is also disappointing given the commitments made in the COP26 summit last month.
With immediate effect, the Department for Transport announced that car owner will be able to claim up to £1,500 towards the upfront cost of a new electric vehicle which has halved over the two reductions in 2021. The list of eligible vehicles has also been reduced with vehicles costing over £32,000 now ineligible, a reduction from £35,000. Similar cuts are also being made to the plug-in van scheme and motorcycle and moped grants.
The Department of Transport has explained its actions stating that it needs to make best use of taxpayer’s money. There are now only 20 models of electric cars that meet the criteria removing all hybrid vehicles available in the UK market as none meet the criteria anymore.
Concessions have been made for wheelchair accessible vehicles with grants remaining at £2,500 grant for vehicles under £35,000 and company car tax incentives remain unchanged.
Whilst the Department of Transport has asserted that the changes do not affect its total overall spending on the EV transition of £3.5bn during this Parliament, it remains to be seen if this proves to be accurate.
The immediate changes have seen adverse reactions from the motor vehicle industry with motorists already suffering rising fuel costs and extensions to low-emission zones across a number of cities. It was anticipated that these factors alongside the incentives available would escalate the UKs move towards decarbonising motor travel, but this is likely to have the opposite effect.
The initial cost of the electric vehicle is widely reported as the biggest barrier to the transition and the industry had called for greater subsidy and support to overcome this hurdle. Dis-incentivising motorists to make the transition is clearly counter-productive. The Government’s position calls into question whether it sees electric power as the future of motoring or will there be other technologies, like hydrogen, that will dominate in the transition to Net Zero.