The UK government is ending the plug-in car grant scheme, following years of reductions in the amount made available to those buying new electric vehicles (EVs).
The announcement has been met with dismay from the automotive industry. The UK is now one of the only countries in Europe that does not subsidise the purchase of new EVs, at a time when the technology is not at price parity with petrol and diesel vehicles.
According to the government announcement, the Plug-in Car Grant (PICG) scheme has succeeded in creating a “mature market for ultra-low emission vehicles, helping to increase sales of fully-electric cars from less than 1,000 in 2011, to almost 100,000 in the first five months of 2022 alone.”
While this sounds like a considerable growth, in the first five months of the year, the figure is closer to 90,000 for the year to date. In total, over 660,000 cars have been sold, meaning that while battery-electric vehicles (BEVs) are proving popular and growing their market share, they still need help to become mainstream.
Wrong time for change
“The decision to scrap the Plug-in Car grant sends the wrong message to motorists and to an industry which remains committed to the government’s net-zero ambition,” commented Mike Hawes, chief executive of the SMMT. “Whilst we welcome the government’s continued support for new electric van, taxi and adapted vehicle buyers, we are now the only major European market to have zero upfront purchase incentives for EV car buyers yet the most ambitious plans for uptake.
“With the sector not yet in recovery, and all manufacturers about to be mandated to sell significantly more EVs than current demand indicates, this decision comes at the worst possible time. If we are to have any chance of hitting targets, government must use these savings and compel massive investment in the charging network, at rapid pace and at a scale beyond anything so far announced.”
Mike Coulton, EV Consultant at Volkswagen Financial Services UK, explained that the decision is ‘hugely disappointing’ as many people need financial incentives to make the switch to electric an affordable option.
“Whilst it should not come as a surprise to see the government have brought to a close the PICG, it is nonetheless hugely disappointing that more is not being done to encourage and support lower-income households in the transition to EVs,” he stated.
“Maintaining or even increasing the PICG for the least expensive EVs to make them more affordable, and encourage manufacturers to produce electric cars at a lower price-point, could have been a strong incentive to help adoption for this sector of the market. This in turn would help to remove older and dirtier internal combustion engine vehicles in the same way that scrappage schemes have successfully done in the past.”
The government states that: “Significant savings in running costs for electric cars compared to petrol or diesel equivalents can often exceed the current £1,500 value of the grant, and electric car drivers will continue to benefit from generous incentives including zero road tax and favourable company car tax rates, which can save drivers over £2,000 a year.”
While this is true, these savings come over the time of ownership, and not at the initial outlay. Many drivers are looking to the EV market to avoid the high costs of fuel. With bigger purchase prices for EVs over internal combustion engine models, it remains to be seen how this move will impact BEV sales in the coming months.
Building the UK’s charging infrastructure
The decision to end the grant has been taken to allow the government to move funding over to development of the UK’s EV charging infrastructure. While sales of BEVs are increasing, the ratio of cars to chargers is expanding.
This has created a new worry amongst those exploring an EV purchase, charging anxiety. This replaces range anxiety, as BEVs can now cover many more miles, the question is whether drivers can charge when they reach their destination. The government has already committed £1.6 billion towards expanding the country’s public EV charging infrastructure.
This expansion is required as many who may consider purchasing an EV are unable to have a domestic charging point. Those living in flats and houses without dedicated parking will rely on public chargers, many of which are outdated and unreliable at present.