Future of electric car grant in doubt as 2035 ban looms into view

Ministers warn incentives must offer “value for money for the taxpayer”, and “we think there’s a better way of doing it”

Hyundai Kona Electric charging

The future of the UK Plug in Car Grant (PiCG) - which sees Government subsidies knock £3,500 off the price of a new electric car - looks increasingly shaky, following statements from two Government ministers casting doubt on the scheme, which is due to end in March 2020 by default.

This is despite the ban on sales of new petrol and diesel vehicles being brought forward from 2040 to 2035, and the expansion of the ban to take in hybrids and plug-in hybrids (PHEVs).

What is the plug-in car grant

The Department for Transport’s Future of Transport Minister, George Freeman, told Auto Express the grant was only ever intended "to kick-start the early market for electric vehicles, and funded over 200,000 electric vehicles including pure electrics and plug-in hybrids." Freeman highlighted figures from the Society of Motor Manufacturers and Traders (SMMT) that showed a 204 per cent increase in EV sales in January, compared to the same month last year.

Freeman added: “But as prices of these cars come down, it is right that the Government ensures value for money for the taxpayer while focusing our support on zero emission models.”

The increasing popularity of electric cars bringing about a reduction in pricing is, however, an uncertain future trend. Car makers struggle to turn a profit on electric cars, with Mike Hawes, chief executive of the SMMT, describing EVs as “generally loss leaders” for firms.

Further uncertainty over the future of the PiCG was sewn by secretary of state for justice, Robert Buckland, who told a Question Time audience that instead of the PiCG: “We think there’s a better way of doing it...By scaling up the infrastructure it means that more people will start to buy electric cars, and with that scale of demand then the price starts to come down. I think that’s the way we’re going to do this.” Buckland added that he couldn’t “judge what’s going to happen in the budget”, however.

The SMMT's Mike Hawes warned the Government must "bring the consumer on the journey with an equally ambitious package of incentives and infrastructure."

He added: "Prematurely removing upfront purchase grants can have a devastating impact on demand so we need a long-term commitment to the plug-in car grant as a matter of urgency. This must also apply to all zero-emission capable vehicles, including plug-in hybrids, which not only deliver essential air quality and environmental gains today, but are an important stepping stone to a tailpipe-free future.”

The Budget, which is to be delivered on March 11, is under the control of the Chancellor of the Exchequer and the Treasury, with a spokesperson for the latter telling The Telegraph that “We have always said we would phase out the subsidies gradually, but there are other ways we can help people to go electric.”

The paper’s Government source insisted that “consumer incentives will continue to play a role beyond 2020” and that “we are not going to end up in a cliff-edge situation where we suddenly stop subsidising electric cars”.

But with rumours continuing to circulate that the PiCG will end in March, and no firm denial from Government this this will be the case, it looks increasingly likely that the only incentives to remain will be a £500 discount on home EV chargers, exemption from VED road tax, and reduced taxation for company car drivers, who will escape all Benefit-in-Kind charges this financial year if they choose an electric car.

Sales of new plug-in hybrids to be banned: confirmation

When the Government announced its consultation into moving the 2040 ban forward to 2035, it said the ban would be “including hybrids for the first time” - though no mention was made of plug-in hybrids (PHEVs).

Future of Transport Minister George Freeman confirmed to Auto Express, however, that while PHEVs “can deliver significant emissions savings and will continue to be important in helping motorists make the switch to a cleaner and different way of powering their vehicles”, the Department for Transport considers that “they are not always driven in zero emission mode and would therefore not be permitted for sale after the phase out date.”

• Best electric cars

Government invests heavily in charging infrastructure

Freeman highlighted that charging infrastructure played a huge role in the Government’s £1.5billion Road to Zero strategy that aims to bring about zero emission road transport.

“We want to have the best charging infrastructure networks in the world for electric vehicles, and for chargepoints to be accessible, affordable and secure. We now have over 24,000 publicly accessible charge-points across the UK, and more than 2,500 are rapid devices, one of the largest networks in Europe.”

The Minister highlighted a £400million investment, half of which came from private business, and half from Government coffers, that “will see thousands more electric vehicle chargepoints installed across the UK.”

Second-hand petrol and diesel cars unaffected by 2035 ban

Asked if any restrictions related to the sale of second-hand petrol, diesel and hybrid cars were being considered, Freeman was firm: “To be clear, this consultation is about the phase out of new sales of petrol and diesel cars and vans. It does not include used vehicles.”

Should the plug-in car grant be axed? Have your say in the comments...

Recommended

Tory no-show at ‘fair fuel prices’ debate sparked by 102k-signature petition
News

Tory no-show at ‘fair fuel prices’ debate sparked by 102k-signature petition

As the public calls for action, the treasury points to ‘savings’ from a 2010 fuel price escalator freeze
24 May 2022
Speeding to be recorded as a cause of many more car accidents
Police car on scene at accident
News

Speeding to be recorded as a cause of many more car accidents

New police guidance for reporting will see a big rise in speeding recorded as a cause of car crashes
17 May 2022
World’s car bosses fear supply chain crisis will slow electric car production
Production line
News

World’s car bosses fear supply chain crisis will slow electric car production

Leading industry figures warn of looming problems at Financial Times’ Car of the Future Summit.
13 May 2022
Privately owned e-scooters to be legalised for use on public roads
E-Scooters
Consumer news

Privately owned e-scooters to be legalised for use on public roads

Transport minister announces plans to create new vehicle category for e-scooters as part of upcoming Transport Bill
12 May 2022

Most Popular

Best motorhomes 2022: the top 5 picks for all budgets
Chausson motorhome
Tips & advice

Best motorhomes 2022: the top 5 picks for all budgets

In the market for a new motorhome? Here are our top-five recommendations...
18 May 2022
New all-electric Volkswagen Aero B saloon to rival Tesla Model 3
Volkswagen Aero B exclusive image - front
Volkswagen

New all-electric Volkswagen Aero B saloon to rival Tesla Model 3

The new four-door VW Aero B EV could come with up to 435 miles of range and our exclusive images preview how it could look
20 May 2022
New all-electric Alfa Romeo Duetto Spider shapes up
Alfa Romeo Duetto Spider - watermarked front
Alfa Romeo

New all-electric Alfa Romeo Duetto Spider shapes up

Alfa Romeo bosses have confirmed that a new two-seat electric roadster is in the company’s rejuvenation plans and our exclusive images preview how it …
19 May 2022