Yesterday (15th December 2021), Parliamentary Under Secretary of State, Trudy Harrison MP published a written statement regarding changes to the Plug-in Car Grant scheme. This grant has now been reduced to £1,500 on cars costing less than £32,000 – a reduction from £35,000.
Response from the industry has been both swift and various.
Edmund King, AA president, said: “Many drivers and fleets will be recalculating today to see if they can still afford their chosen EV now that the grants and threshold have been cut. With ambitious targets heading into 2030 it seems counterintuitive to reduce incentives although we accept that those purchasing the lower value EVs probably have greater need for assistance.
“Drivers have consistently told us that the main barrier to EV ownership is the initial purchase price. While we are encouraged that new EV sales have increased this year, we feel this mainly due to company car purchases and salary sacrifice schemes.
“This type of purchase is not available for everyone, so reducing the grant and the number of vehicles eligible will be a disappointment for many.
“The most effective method of encouraging mass electric car adoption is to scrap the VAT – a policy we have called for since 2020. Low income households say this would help them the most in switch away from fossil fuels.”
Tanya Sinclair, Policy Director for UK & Ireland at ChargePoint: “We understand the government’s broad programme of grants and incentives was always designed to stimulate the early EV market and, over a decade since their inception, the EV market continues to develop at pace. We look forward to the government announcing a long-term, more sustainable successor to the grant schemes which can incentivise EV uptake, such as fiscal incentives and road pricing.”
Jon Lawes, Managing Director, Hitachi Capital Vehicle Solutions, said: “Last minute cuts to both the grants for cars and vans are counter intuitive to achieving the ambitious targets set by the Government to reduce carbon emissions and has the potential to dampen the strong demand for zero emission vehicles we’ve seen in recent months.
“Despite the growth of EV registrations, this market remains in its infancy and TCO, especially across LCVs, can be challenging for fleet operators who need to adopt. The government rationale to reducing eligibility at this juncture for the second time this year is confusing, as we know financial incentives to encourage EV adoption are an important factor within the vehicle renewal decision making process.”
“In light of these changes, we are working closely with our customers to recalculate their TCO so they can readily factor this development within their decision making.”
Richard Jones. Managing Director at Lex Autolease and Black Horse at Lloyds Banking Group, said: “As the uptake in electric vehicles continues to accelerate the UK’s journey to net zero, we understand that policymakers will need to continuously review the grants available. However, the announcement made today to reduce grants from £35,000 to £32,000 will impact around 60% of the vehicles available in the market increasing rentals on new orders on a 36 month agreement by around £70 a month overnight. The changes to the van and motorcycle market which are both in relative infancy could also hamper adoption.
“We hope that Government departments and industry bodies continue to work together to maximise the opportunities to encourage EV uptake and reassure manufacturers that the UK is leading the EV charge.”
Mike Hawes, SMMT Chief Executive, said: “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.
“Industry and government ambition for decarbonised road transport is high, and manufacturers are delivering ever more products with ever better performance. But we need to move the market even faster – from one in a hundred cars on the road being electric, to potentially one in three in just eight years – which means we should be doubling down on incentives. Other global markets are already doing so whereas we are cutting, expecting the industry to subsidise the transition, and putting up prices for customers. UK drivers risk being left behind on the transition to zero-emission motoring.”
Paul Willcox, Managing Director, Vauxhall, commented: “Vauxhall recently welcomed the government’s announcement to implement a zero emission vehicle mandate as it would provide clarity to the UK motor industry and we want to encourage EV adoption in the UK.
Today’s changes provide a confusing message to UK consumers and will harm EV adoption at a time when we need to be doing all we possibly can if we are to stand a chance to move the UK to electrified only vehicles by 2030.
Whilst we understand the government’s desire to phase out the plug-in vehicle grant at some point, we really need to see a more strategic, longer-term approach. A lack of clarity and certainty for customers can only harm EV adoption and leave the UK lagging behind other countries in the race to decarbonise personal transport.
Whilst electric vehicle adoption is growing rapidly at the moment, EVs still represent a small percentage of the overall UK vehicle parc. In our view, further work is needed on other fiscal incentives, such as considering a reduction in VAT for EV, and also aiming that support at those that financially need it to make the move to EV.”