The government has downsized the financial incentive package offered to EV owners in the UK, reducing the ‘plug-in car grant’ from £3000 to £2500 and lowering the upper price limit for eligible vehicles.
Buyers of electric cars costing more than £35,000 will now no longer qualify for an incentive, which was previously available on vehicles costing up to £50,000. The changes come into effect immediately from today (18 March).
The move has been made, according to the government, to “reflect a greater range of affordable vehicles available”, and to help funding go further as more drivers make the switch to electric cars.
The government said: “This will mean the funding will last longer and be available to more drivers. Grants will no longer be available for higher-priced vehicles, typically bought by drivers who can afford to switch without a subsidy from taxpayers.”
Since 2019, the government claims, the number of sub-£35,000 pure-electric cars on the market has increased by “almost 50%”. It estimates that more than half the models currently on the market will remain eligible for the £2500 support package, highlighting “spacious family cars” including the MG ZS EV and Hyundai Kona Electric – although the Kona Electric is now eligible exclusively in entry-level 39kWh form.
Until this time last year, all electric cars were eligible for a £3500 government grant. It was reduced by £500 and restricted to sub-£50,000 cars as part of the 2020 budget, at which point funding was said to have been secured to run the scheme until 2022-2023.
The latest reduction has been made in an effort to preserve that timeline and the government has said it will continue to review the scheme in line with “further price reductions in electric vehicles”, suggesting another reduction is on the cards, likely in March 2022.
Transport minister Rachel Maclean said: “We want as many people as possible to be able to make the switch to electric vehicles as we look to reduce our carbon emissions, strive towards our net-zero ambitions and level up right across the UK.
“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.”
The government said it has provided £1.3 billion in grants to buyers of around 285,000 plug-in vehicles since 2011. Originally, the scheme included plug-in hybrid vehicles but was restricted to pure-electric models in 2018 in line with an uptick in electric car availability and popularity.
Today’s unexpected announcement was met by criticism from SMMT chief executive Mike Hawes, who condemned the change as “the wrong move at the wrong time”.