UK To Scrap £5,000 Plug-In Car Grant?


Daily Mail Online recently published an article titled “Ministers to scrap taxpayer-funded £5,000 grants to electric car buyers after experts find incentive did little to help the environment“.

From the article, we learn that the new policy will reduce subsidies in UK, before phasing them out entirely.

After about two years, the UK government spent £11 million (from £30 million available) on the subsidies, which equates to approximately 2,200 electric or plug-in hybrid car grants (£5,000).

The main thesis of the Daily Mail article is that the grants are only allowing rich families to buy a second car on the cheap and that the grant was introduced to fuel a consumer boom in emission-free cars but it “cannot be maintained indefinitely.”

“It comes after experts found the incentive was doing little to help the environment and instead allowing rich families to buy a second car on the cheap.”

Axing the subsidies for sure will impact short-term electric car sales:

“Research commissioned from the respected Transport Research Laboratory (TRL) suggests that axing the subsidy will come as a major blow to electric car manufacturers.”

“The grant is said to play an ‘important role’ in electric vehicle purchase’ in nine out of ten sales.”

But is this really true? According to “Driving the Future Today“, a strategy for ultra-low emission vehicles in the UK from 04 September, at least until 2015, nothing will change in regards to the plug-in grant scheme and the UK still will invest in electrification:

Annex: Full list of commitments

“Support to 2020 – call for evidence We will make provision for over £500 million from 2015 until 2020 to support the growing market for ultra low emission vehicles. We will launch a call for evidence later in 2013 to inform the development of this package of support, including consumer incentives. This will consider the balance of support between the following workstreams and plot the path to Government’s exit from subsidy.”

Is this EV or ICE grin from Transport Minister Norman Baker?

Is this EV or ICE grin from Transport Minister Norman Baker?

Workstream 1 – Supporting the early market

a) “To provide certainty for investors and consumers the existing plug-in vehicle grants will remain unchanged to May 2015 and consumer incentives will remain in place beyond this date.”

Moreover, the new strategy seems to provide some initiatives for FCEVs.

Transport Minister Norman Baker MP, stated:

“These are exciting times for the motoring industry as ultra low emission vehicles are the future for road travel. Our vision is that by 2050 almost every car and van will be an ultra low emission vehicle with the UK at the forefront of their design, development and manufacture. This strategy moves us up a gear in pursuing that vision.”

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4 Comments on "UK To Scrap £5,000 Plug-In Car Grant?"

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The UK is flailing lately. Going from an oil exporter to an oil importer has not been kind to them.

Never trust anything you read on the Mail! That’s the message here.

I think a reduction in the grant might not actually be as tragic as people think. It is set to 5000 pounds or 25% of the value of the vehicle, which is fine if you want to buy a Tesla but not so helpful if you want a Twizy or a Zoe as you will never get the full grant. I think this is why the Leaf cost upwards of 23000 pounds in the UK ($36000 US) because dropping the price significantly would just erode the value of the grant.

Personally I would rather see modified version of the cash for clunkers type scheme where if you handed in an old ICE vehicle you’d get 5k to buy any EV of any value or type including motor bikes. If you make it a prerequisite of the scheme that you have owned the ICE for a year before purchase you immediately benefit people who have cheap old cars who just need a way to get to work and you give the EV manufacturers a reason to drop their prices as low as possible.

Even at a £5,000 discount there is still plenty left to pay for what are essentially city cars in many cases so duh, these cars often will end up second cars for those who can afford them but so what? No need for the populist outrage: these grants don’t exist to make expensive cars cheaper for the wealthy but to help expensive new technology on its way in the market in the expectation it will get cheaper and wide adoption over time. It’s about long term (environmental) benefits.