Government ends plug-in car grant with immediate effect citing 'success in the UK’s electric car revolution'
Road groups 'disappointed' with the decision
The UK government has announced that the Plug-in Car Grant (PiCG), which provides an incentive of £1,500 to buyers of new electric vehicles, is to be scrapped with immediate effect.
The Department for Transport made the announcement hailing “the success in the UK’s electric car revolution” as the reason for the move.
With the government having previously committed to funding the scheme until 2022/2023 and repeated cuts to both the grant and the vehicle value threshold, the ending of the PiCG was not unexpected.
Following the end of the PiCG, £300m in funding ill instead be directed towards grants aimed at incentivising the uptake of plug-in taxis, motorcycles, vans, trucks and wheelchair-accessible vehicles, the DfT said.
Shifting the focus away from the PiCG will also free-up more funding for the expansion of the UK’s public charging network, it claimed. This will be in addition to the £1.6bn it has already committed to the project.
While the PiCG has been scaled back over the past few years — the most recent reduction was the announcement six months ago that the value of the grant would be cut from £2,500 to the present £1,500 on cars under £32,000 — the government has cited the project as being instrumental in significantly increasing the uptake of electric vehicles on UK roads.
“The scheme has succeeded in creating a mature market for ultra-low emission vehicles, helping to increase the sales of fully electric cars from less than 1,000 in 2011 to almost 100,000 in the first five months of 2022 alone,” the DfT said in a statement.
“Battery and hybrid electric vehicles now make up more than half of all new cars sold, and fully electric car sales have risen by 70% in the last year, now representing one in six new cars joining UK roads.”
According to the latest figures from the SMMT, by the end of May there had been 92,512 battery-electric vehicles sold in the UK in 2022, more than 39,000 of those occurring in March alone.
The Department for Transport made the point that for buyers of electric cars, a significant financial incentive was already in place in the shape of lower running costs compared to a petrol or diesel models, which “can often exceed the current £1,500 value of the grant.”
“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,” the DfT said.
However, electric cars are more expensive than equivalent petrol cars up front, with sticker prices of a hatchback EV generally around £6,000 dearer. Price parity is expected in the coming years but hasn’t yet been reached.
Transport Minister Trudy Harrison said: “The government continues to invest record amounts in the transition to EVs, with £2.5bn injected since 2020, and has set the most ambitious phase-out dates for new diesel and petrol sales of any major country.
“But government funding must always be invested where it has the highest impact if that success story is to continue.
“Having successfully kickstarted the electric car market, we now want to use plug-in grants to match that success across other vehicle types, from taxis to delivery vans and everything in between, to help make the switch to zero emission travel cheaper and easier.
“With billions of both government and industry investment continuing to be pumped into the UK’s electric revolution, the sale of electric vehicles is soaring.
“We are continuing to lead the way in decarbonising transport, with generous government incentives still in place, while creating high-skilled jobs and cleaner air across the UK.”
Claire Miller, director of technology and innovation at EV leasing company Octopus Electric Vehicles, believes market forces need to drive down prices now that the grant has been pulled.
“It would be difficult to underplay the significance of the plug-in car grant,” she said. “When the scheme started, you could fit the annual registration of electric cars in your local car park — today we’re seeing hundreds of thousands sold in just the first half of the year. Drivers are waking up to the benefits of making the switch to an EV and we’re seeing demand soar.
“It’s now over to the manufactures to meet demand with supply. Supply chain issues have led to long wait times for the latest EVs on the market. Manufacturers must do everything they can to strengthen supply at every stage to meet current and predicted demand. Without it, we’ll have more customer frustration and slower growth of the second hand market through these crucial early years of the electric decade.”
The announcement, however, was not well received by some motoring groups who argued that more incentives are needed to get car buyers to make the switch to electric vehicles.
“The UK’s adoption of electric cars is so far impressive, but in order to make them accessible to everyone, we need prices to fall,” said Nicholas Lyes, head of roads policy at the RAC.
“Having more on the road is one important way of making this happen, so we’re disappointed the government has chosen to end the grant at this point. If costs remain too high, the ambition of getting most people into electric cars will be stifled.”
The government said that all existing applications for the PiCG will be honoured, including those where a car has been sold in the two working days prior to the announcement and where the application for the grant has not yet been made by a dealership.
Related articles
- After reading about the scrapping of the PiCG, you might like to check out all the car makers’ electric vehicle plans
- Also check out our list of the five best electric cars to buy in 2022
- And don’t miss our review of the 2020 Renault Zoe
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