UK cuts plug-in grants for electric cars from £2,500 to £1,500

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Richard Stobart, CEO of an electric vehicle charging system startup company, demonstrates one of the company's lamp post chargers in London, Britain, September 20, 2021. Picture taken September 20, 2021. REUTERS/Nick Carey
The head of automotive at KPMG UK said the automotive industry remains confident about the path to net zero. Photo: Reuters

The UK government is slashing its plug-in grants for electric cars introduced a decade ago by £1,000 ($1,325), even as it has lofty ambitions to achieve net zero emissions by 2050.

Starting on 15 December, the government will provide grants of up to £1,500 for electric cars priced under £32,000 instead of £2,5000 “focusing on the more affordable vehicles and making best use of taxpayers’ money” it said in a statement.

The grant of £2,500 is available for vehicles priced under £35,000 – £3,000 less than previously announced – while large vans will get £5,000, with a per financial year limit of 1,000 grants per business.

There will be no changes for trucks, which will get between £16,000 and £25,000, depending on size.

Motorcycles priced up to £10,000 will receive £500 and mopeds will get £150.

“These changes will allow the scheme’s funding to go further, helping more people and businesses to switch to an electric vehicle,” the government said.

It added that the “generous tax incentives” – zero road tax and favourable company car tax rates – can save drivers more than £2,000 a year, and continue to remain in place.

It also said the total cost of EV ownership is expected to reach parity during the 2020s compared to petrol and diesel cars.

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Meanwhile, the auto industry has hit out at these changes. Mike Hawes, CEO of the Society of Motor Manufacturers and Traders (SMMT) claimed, “Slashing the grants for electric vehicles once again is a blow to customers looking to make the switch and couldn’t come at a worse time, with inflation at a ten-year high and pandemic-related economic uncertainty looming large.”

He said the government should be doubling down on incentives for consumers to buy EVs, rather than reduce them.

“Industry and government ambition for decarbonised road transport is high, and manufacturers are delivering ever more products with better performance. But we need to move the market even faster – from one in a 100 cars on the road being electric, to potentially one in three in just eight years.”

“UK drivers risk being left behind on the transition to zero-emission motoring.”

But the government has said, “it is right that we seek to focus the grants, which are funded by the taxpayer, on the areas where they will have the most impact and where the market still needs government support.”

Richard Peberdy, head of automotive at KPMG UK, also criticised the move but said the automotive industry remains confident about the path to net zero.

“Our recent global automotive survey suggests that industry executives see a strong need for subsidy schemes right now to aid the transition to EVs. But more than three quarters of executives told us that even if subsidy schemes were totally removed, EV adoption will still be widespread by the end of this decade.”

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