Government plug-in car grant slash draws industry criticism

T

he government’s decision to reduce the plug-in car grant for pure EVs from £3,000 to £2,500 has drawn criticism from the UK automotive industry.

Sue Robinson, chief executive of the National Franchised Dealers Association (NFDA), echoed the sentiment of much of the automotive industry, stating that the decision was “extremely disappointing as it risks undermining the progress the UK has been making towards a zero-emission market”.

In addition to the slash to grant amount, the government has also reduced the list price cap from £50,000 to £35,000. Changes are effective immediately.

Defending the decision, 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.”

While the announcement feels like a step in the wrong direction, Jamie Hamilton, head of electric vehicles at Deloitte, notes that it is important to make clear that this is not the removal of all incentives. “Others remain in certain parts of the market (sub £35,000) and in other forms, such as benefit in kind taxes. Likewise, there are significantly lower operating costs, such as fuel and maintenance, and investment in infrastructure also continues to support the rollout of EVs.

“Around half of new registrations are fleet and company cars so businesses now have a greater role to play. The value of benefit in kind for electric cars, and the opportunity to structure this through salary sacrifice, will continue to be the main driver of fleet sales, providing an ongoing financial incentive for businesses and their employees to switch. Crucially, many models still fall into the eligible price band.”