Dismay at end of PHEV grant as fuel prices soar again

Mike Hawes, SMMT Chief Executive, said, “The decision to scrap the Plug-in Car grant sends the wrong message to motorists and to an industry which remains committed to Government’s net zero ambition.

“Whilst we welcome government’s continued support for new electric van, taxi and adapted vehicle buyers, we are now the only major European market to have zero upfront purchase incentives for EV car buyers yet the most ambitious plans for uptake.

“With the sector not yet in recovery, and all manufacturers about to be mandated to sell significantly more EVs than current demand indicates, this decision comes at the worst possible time.

“If we are to have any chance of hitting targets, government must use these savings and compel massive investment in the charging network, at rapid pace and at a scale beyond anything so far announced.”

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 5 months of 2022 alone.

Battery and hybrid electric vehicles (EVs) 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 1 in 6 new cars joining UK roads.

The government has always been clear the plug-in car grant was temporary and previously confirmed funding until 2022-23.

Successive reductions in the size of the grant, and the number of models it covers, have had little effect on rapidly accelerating sales or on the continuously growing range of models being manufactured.

Due to this, the government is now refocusing funding towards the main barriers to the EV transition, including public charging and supporting the purchase of other road vehicles where the switch to electric requires further development.

To continue the government’s drive towards net zero and ensure effective use of taxpayer funds, £300 million in grant funding will now be refocused towards extending plug-in grants to boost sales of plug-in The government is today closing the plug-in car grant scheme to new orders after successfully kick-starting the UK’s electric car revolution and supporting the sale of nearly half a million electric cars.

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 5 months of 2022 alone.

Battery and hybrid electric vehicles (EVs) 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 1 in 6 new cars joining UK roads.

The government has always been clear the plug-in car grant was temporary and previously confirmed funding until 2022-23. Successive reductions in the size of the grant, and the number of models it covers, have had little effect on rapidly accelerating sales or on the continuously growing range of models being manufactured.

Due to this, the government is now refocusing funding towards the main barriers to the EV transition, including public charging and supporting the purchase of other road vehicles where the switch to electric requires further development.

To continue the government’s drive towards net zero and ensure effective use of taxpayer funds, £300 million in grant funding will now be refocused towards extending plug-in grants to boost sales of plug-in taxis, motorbikes, vans, trucks and wheelchair accessible vehicles as announced in the autumn statement last year.

The shift in £300M funding will   on expanding the public chargepoint network, helping to eradicate “range anxiety” and ensure the transition to zero-emission transport is easy and convenient for all drivers across the UK.

This will be in addition to the £1.6 Billion it promised to increase the public charging network.

Swift reaction to the cut

RAC head of policy Nicholas Lyes went on, “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 – 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.”

Claire Miller, director of technology and innovation at Octopus Electric Vehicles, said,“It would be difficult to underplay the significance of the plug-in car grant.

“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.”

Paul Hollick, chair at the AFP, added,“This is, to our mind, a premature move by the government.

“The various tax incentives and grants that have been made available to speed EV adoption are playing an important part in businesses and their drivers choosing electric cars. At a time when both vehicle prices and costs are rising, the removal of the grant makes the process of electrification notably more expensive at the sub-£32,000 end of the market where it applied.

“Our worry is that there is a general belief among government decision makers that the EV company car market now has sufficient momentum and can be left to its own devices. We are concerned that similar moves may be made around benefit-in-kind taxation from the middle of the decade, which is an area where we feel there very much needs to be a ‘soft landing’ over time.

“What the government should note is that the impetus behind EV use by businesses is yes, partially driven by environmental concerns but also by financial advantages. If the sums for operating EVs don’t stack up, adoption could very well slow down.

“Of course, all of this is happening against a backdrop of EVs of all kinds simply becoming very hard to get hold of, which further complicates the issue. Anyone ordering an electric company car today will likely not receive it for a year and could still be driving it in 2027-28. That creates a long-term financial risk for employers and drivers that is extremely difficult to forecast.”

It was also described as a premature move which will impact on poorer households in particular who cannot afford a fully electric car.

“The decision to close the Plug-in Car Grant is exceedingly disappointing as it will, without doubt, heavily disincentivise EV adoption across the UK and has the potential to derail the positive progress the automotive sector has made towards decarbonising transport. This move sends the wrong message to consumers and will ultimately harm less affluent families seeking a transition to a cleaner method of transport”, said Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), which represents franchised car and commercial vehicle dealers in the UK.