Government says ‘no’ to new cash incentives for electric car buyers

Car makers and parliamentarians calling for a new package of cash incentives to boost affordability of new electric cars have been dismissed by the government. In a newly published response to the recent House of Lords Environment and Climate Committee report into electric cars, the government states it disagrees with the committee’s demand for new targeted grants.

The Lords’ recommendations were published in February 2024, and stated that “the Government should explore targeted grants to incentivise the purchase of EVs with a view of facilitating a list price under an appropriate threshold”. According to the report’s authors on the Parliamentary committee, such a move would stimulate a more affordable market for EVs, support moves towards price parity with internal-combustion vehicles, and could be used to help counteract the trend towards the large and heavy SUVs that have the worst environmental impact.

Those supporting the calls for a new package of incentives to replace the Government’s Plug-in Car Grant that was withdrawn in 2022, include the Society of Motor Manufacturers and Traders. SMMT chief executive Mike Hawes who has repeatedly called for what he recently termed “compelling fiscal incentives” to discount the cost of EVs for private buyers.

In its written response to the Committee published today, the government says it “disagrees with the recommendation” and will continue to focus on incentivising fleet users to choose EVs through the company car tax system. 

“According to industry data, the purchase price premium of an EV – relative to an equivalent internal combustion engine (ICE) vehicle – has dropped from around 50 per cent in 2020 to around 40 per cent in 2023,” the response states. “With battery costs reducing and continued innovation, some external forecasts predict that some EVs could be around the same price to purchase as a petrol or diesel car by the end of the 2020s. The Government is targeting its incentives where they have the most impact and deliver the greatest value for money.”

Baroness Parminter, Chair of the inquiry said: “Whilst we welcome the Government’s acceptance of some of the recommendations in our report, it is particularly disappointing that it is not committing to incentivising the purchase of more EVs.” She also highlighted the government’s rejection of other measures, including the equalising of the VAT differential between public and domestic charging.

“Peers will keep urging the Government to do more, as otherwise the EV revolution is a non-starter”, she said.

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