The UK government has announced an immediate reduction on the discount consumers of new plug-in hybrid electric vehicles (PHEVs) are able to claim.
From today, the government will provide grants of up to £2,500 (down from £3,000) for plug-in cars, vans and trucks priced under £35,000, while grants have been scrapped entirely for higher-priced vehicles. However, tax incentives, including company car tax rates, will remain in place.
The plug-in car grant was introduced 10 years ago to stimulate the market for zero-emission vehicles. Having provided close to £1.3bn in funding to support the purchase of more than 285,000 vehicles, the scheme was renewed last year, with £582m of funding intended to last until 2022 to 2023.
However, the UK Department for Transport has now claimed that the government had “been clear since 2018 that [it] intend[s] to reduce the plug-in car grant”.
UK transport minister Rachel Maclean said: “The increasing choice of new vehicles, growing demand from customers and rapidly rising number of chargepoints mean that, while the level of funding remains as high as ever, given soaring demand, we are refocusing our vehicle grants on the more affordable zero emission vehicles – where most consumers will be looking and where taxpayers’ money will make more of a difference.
“We will continue to review the grant as the market grows.”
The government’s decision to cut the grant has not been received positively by corners of the automotive industry, with some of the belief that more incentives were needed to help the country reach zero-emission targets.
Graham Hoare, chairman, Ford of Britain, said: “Today’s news from the UK government that plug-in grants for passenger and commercial vehicle customers are being reduced is disappointing and is not conducive to supporting the zero emissions future we all desire.
“Robust incentives – both purchase and usage incentives – that are consistent over time are essential if we are to encourage consumers to adopt new technologies, not just for all-electrics but other technologies too like PHEVs that pave the way to a zero emissions future.”
Mike Hawes, SMMT chief executive, added: “The decision to slash the Plug-in Car Grant and Van & Truck Grant is the wrong move at the wrong time. New battery electric technology is more expensive than conventional engines and incentives are essential in making these vehicles affordable to the customer.
“Cutting the grant and eligibility moves the UK even further behind other markets, markets that are increasing their support, making it yet more difficult for the UK to get sufficient supply.
“This sends the wrong message to the consumer, especially private customers, and to an industry challenged to meet the government’s ambition to be a world leader in the transition to zero-emission mobility.”
According to the government, the number of electric car models priced under £35,000 has increased by almost 50% since 2019 and more than half the models currently on the market will still be eligible for the grant, including family cars.
Furthermore, nearly 11% of new cars sold in 2020 were reportedly plug-ins, up from just over 3% in 2019, while battery-electric car sales were said to have almost tripled over that same period.
