Ministers have shut down the Plug-in Car Grant, which offered drivers up to £1,500 off the cost of a new electric vehicle, saying it is no longer needed to spur electric vehicle purchases.
The grant will be closed to new applicants on Tuesday, the government announced.
Sales of electric cars are soaring, with more than one in six new cars on the road now battery-electric or hybrid.
The government said grant funding was no longer a major driver of new electric vehicle sales and would be better spent on improving the public charging network to ease ‘range anxiety’ “.
What is the Plug-In Car Subsidy?
The Plug-in Car Grant was created by the government in 2011 to help stimulate a then-nascent market for electric vehicles. It originally offered drivers a £5,000 grant towards the cost of a new electric car.
At the time of its launch, there was only one electric vehicle on the UK market – the Mitsubishi i-MiEV. Since then, dozens of electric vehicle models, from the Nissan Leaf to the Tesla Model 3, have entered the UK market.
As electric vehicles grow in popularity, the government has repeatedly cut the amount of the grant, recently reducing it from £2,500 to £1,500 in December 2021.
Why is the subsidy for plug-in cars being abolished?
The government said sales of electric vehicles are now growing rapidly without help from the grant, with sales of all-electric cars rising by 70% last year, despite the reduced generosity of the grant.
Ministers said the money used for the grant would be better spent on removing other “barriers” to electric vehicle ownership, such as increasing the number of public charging stations and supporting taxi drivers and van drivers to switch to electric models.
“Having successfully launched the market for electric cars, we now want to use plug-in grants to match that success on other types of vehicles, from taxis to delivery vans and everything in between, to help make the shift to zero emissions cheaper and easier,” said Transport Minister Trudy Harrison.
When does it close?
The grant is now closed to new orders starting Tuesday, June 14.
However, ministers said all existing grant applications would continue to be honoured.
Where a car has been sold within two business days of the announcement, but a dealer grant application has not yet been made, the sale will also be eligible for the grant.
How did the industry react to the news?
Mike Hawes is the chief executive of the Society of Motor Manufacturers and Traders, the trade body for motor vehicle manufacturers. He said the decision to remove the subsidy “sends the wrong message to motorists” and “comes at the worst possible time” for the industry as it faces mandates to sell more electric vehicles to the public.
Meanwhile, Ginny Buckley, founder and chief executive of Electrifying.com, fears that removing the subsidy could push the UK into a “two-tier nation” when it comes to electric vehicle ownership.
“As the government points out, sales of electric cars have increased by 70% over the last year and now account for one in six new cars on UK roads. But dig a little deeper and these figures reveal that a large part is registered with professional users benefiting from financial incentives, including salary sacrifice programs and low in-kind benefits,” she said.
Is it still worth buying an EV?
For many drivers, the plug-in car subsidy is no longer a major incentive to switch to an electric vehicle.
The cost of buying an all-electric car has dropped significantly over the past decade, due to an 89% drop in the cost of producing car batteries.
This has helped put electric cars into the price range of many middle-class consumers, although the initial cost is still higher than that of petrol or diesel engines. There are currently 24 EV models on the UK market priced below £32,000.
Those who can afford the initial cost of an EV stand for significant savings on fuel. Charging an electric car has almost always been cheaper than refueling a petrol or diesel engine, but as the price of fuel on the forecourt has skyrocketed in recent weeks, the savings are now significant.
Analysis published by climate website Carbon Brief suggests that while the average UK cost of refueling a 55-litre petrol car is now nearly £100, recharging an electric car to travel a equivalent distance costs just £37.
EV drivers also pay no road tax and are generally exempt from city center congestion charges.
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