Ministers insist surging demand for EVs justifies changes to popular grant scheme to ensure more motorists can take advantage of funding
The government has today controversially announced it is cutting the grants available through its popular Plug-in Grant Scheme, arguing that surging demand for electric vehicles (EVs) justifies changes to the scheme to ensure more motorists can secure support when switching to zero emission models.
Under the new reforms, grants for people buying electric cars will be cut from £2,500 to £1,500, while the price cap on cars that qualify for the scheme will be lowered from £35,000 to £32,000.
The government said the grants would still be available for around 20 of the more affordable electric car models on the market and that the cuts would “ensure taxpayers’ money makes the most difference”. It also confirmed that support for wheelchair accessible vehicles would remain at the £2,500 grant level and retain the higher £35,000 price cap.
Similar cuts are also set to be imposed on electric vans and motorcycles. Maximum grants for small electric vans with a gross vehicle weight (GVW) of 2.5 tonnes or less are to be cut from £3,000 to £2,500, while grants for larger electric vans have similarly been cut from £6,000 to £5,000.
In addition, the government announced a limit of 1,000 grants per customer per year, which experts warned could hamper corporates’ efforts to accelerate plans to switch their fleets to 100 per cent electric models.
Motorcycle and moped grants have also been cut to £500 for electric motorcycles and £150 for electric mopeds, with a price cap on vehicles of £10,000.
The move follows hot on the heels of changes to the scheme last March, which cut grants for electric cars from £3,000 to £2,500. The cuts stand in stark contrast to moves from other European governments to sharply increase EV grants as part of their post-COVID green recovery packages.
However, the government noted that the market responded to the cuts to plug-in grants that came into force in March with car manufacturers dropping prices for 18 zero emission models. And it stressed that generous tax incentives for EVs remain in place, including favourable company car tax rates, which can save drivers over £2,000 a year.
The government also stressed that the Plug-in Grant Scheme had supported nearly half a million vehicles over the past decade and had helped “kickstart” a market that now accounts for more than one in 10 cars sold in the UK.
“The market is charging ahead in the switch to electric vehicles,” said Transport Minister Trudy Harrison. “This, together with the increasing choice of new vehicles and growing demand from customers, means that we are refocusing our vehicle grants on the more affordable vehicles and reducing grant rates to allow more people to benefit, and enable taxpayers’ money to go further.”
The changes came as the government also announced it will introduce new rules next year that aim to increase confidence in EV charging infrastructure.
The rules will mandate a minimum payment method – such as contactless payment – for new 7.1 kW and above chargepoints, including rapid-chargers. Motorists will also soon be able to compare costs across networks which will be in a recognisable format similar to pence per litre for fuel and there will be new standards to ensure reliable charging for electric vehicle drivers, the Department for Transport said.
“We want as many people as possible to be able to make the switch to an electric vehicle, which is why we will also be introducing new rules to make it easier to find and pay at chargepoints,” said Harrison. “This will ensure drivers have confidence in our charging infrastructure, as we look to reduce our carbon emissions, create green jobs and level up right across the UK.”
The government also insisted today’s changes would have no impact on its overall investment in the shift to zero emission vehicles, highlighting how total funding committed to support the transition to zero emission vehicles stands at £3.5bn, including support for the UK auto supply chain, as well as direct grants for motorists and support for charging networks.
However, the cuts to grants drew condemnation from experts, who have long warned that the shift to EVs needs to accelerate rapidly over the next decade if the UK is to deliver on its emissions goals.
Gill Nowell, head of electric vehicles at LV= General Insurance, said upfront cost remained one of the main barriers for people considering switching to an EV and as such cutting grants could have a direct impact on demand.
“Whilst it’s good that financial support is being targeted at the most affordable electric cars, a £1,000 cut to the existing grant, at a time when living costs are rising, still creates a massive financial barrier for people considering the switch to a green car – it’s like robbing Peter to pay Paul,” she said.
“Our research shows that almost half of drivers are put off buying an electric car due to the relatively high upfront sticker price. In the current environment of increased living costs, the government should focus fiscal support on making electric cars affordable and helping people understand the running costs, which can in fact make electric cars better value over the lifetime of owning the vehicle.”