Government says no to grants on new electric cars

James Batchelor

20 Apr 2024

The Government will not reintroduce incentives on new EVs to help consumers make the switch to electric and boost uptake.

A report written by the House of Lords Environment and Climate Change Committee for an inquiry into the UK's adoption of electric cars outlined a number of recommendations the Government should take to support electric vehicle uptake. The suggestions, published in February, included levelling out the VAT difference between public and home charging.

Chief among the recommendations were grants on new EVs to support buyers looking to choose electric for their next car, and was seen as a shot in the arm to supercharge sales. Carmakers, too, have been calling for incentives on new EVs, including Fiat. However, the Government responded to the inquiry yesterday (Apr 19) and ruled out a raft of the recommendations including the reintroduction of the Plug-in Car Grant (PiCG).

The original PiCG was launched in 2011 and saw £5,000 slashed off the price of cars with plugs. It was periodically downgraded before finally offering just £1,500 off the price of a plug-in car when it was axed in 2022.

The report suggested a new grant would "stimulate the affordable market", however the Government disagreed. 

In its response, published on April 19, the Government said: "In June 2022, the Government published a public evaluation report, which highlighted that the Plug-in Car Grant was vital in building the early market for electric vehicles. It then had less of an effect on demand than other existing price incentives, such as company car tax. In 2023, battery-electric vehicles represented 16.5% of new car sales in the UK.

"The price gap for new cars has continued to decrease over the past few years. According to industry data, the purchase price premium of an EV – relative to an equivalent internal combustion engine vehicle – has dropped from around 50% in 2020 to around 40% in 2023.

"With battery costs reducing and continued innovation, some external forecasts predict that some EVs could be around the same price to purchase as a petrol or diesel car by the end of the 2020s."The government is targeting its incentives where they have the most impact and deliver the greatest value for money. Plug-in grants will continue until at least financial year 2024/25 for motorcycles vans, taxis, trucks and wheelchair accessible vehicles." 

Other recommendations included incentives for used electric cars, petrol-station-like totem signs at the side of motorways giving charging point prices, and cutting public charging point VAT from 20% to 5%. The Government disagreed with these proposals and said it would not be looking to introduce them. 

Commenting on the Government’s response, Baroness Parminter, Chair of the inquiry said: "Whilst we welcome the government’s acceptance of some of the recommendations in our report, it is particularly disappointing that it is not committing to incentivising the purchase of more EVs, equalizing the VAT differential between public and domestic charging, or addressing our concerns about barriers to charging in multi-occupancy buildings.

"If implemented, these recommendations would help people to adopt EVs and ensure a smoother journey towards net zero. Peers will keep urging the government to do more, as otherwise the EV revolution is a non-starter."

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