Electric car price hike warning after Conservatives cut subsidies to support the switch to green
The auto industry said the funding and eligibility cuts were the “wrong move at the wrong time” and that the incentives were key to making battery-electric vehicles affordable for motorists.
Prices for electric cars could rise after ministers said they would cut subsidies that help cover the cost of electric cars, saying this would extend the term of the funding and allow more motorists to go green.
The Department for Transport (DfT) has announced it will provide grants of up to Â£ 2,500 for electric cars priced below Â£ 35,000, down from the previous maximum of Â£ 3,000 for cars less than Â£ 50,000.
This means that subsidies will no longer be available for more expensive models, which are typically purchased by drivers who can afford them without subsidies, officials said.
But the auto industry said the funding and eligibility cuts were the “wrong move at the wrong time” and that the incentives were key to making battery-electric vehicles affordable for motorists.
The number of electric car models priced under Â£ 35,000 has increased by almost 50% since 2019, and more than half of the models on the market will be eligible for the grant, the DfT said.
Transport Minister Rachel Maclean said: ‘We want as many people as possible to be able to switch to electric vehicles as we seek to reduce our carbon emissions, achieve our net zero ambitions and move forward across the UK.
âThe growing choice of new vehicles, growing customer demand and the rapid increase in the number of charging stations mean that, while the level of funding remains as high as ever, given the increase in demand, we refocus our subsidies on more affordable zero-emission vehicles. – where most consumers will look and where tax dollars will make a bigger difference.
The auto industry body, the Society of Motor Manufacturers and Traders (SMMT), criticized the move.
Mike Hawes, Managing Director of SMMT, said: âNew battery-electric technology is more expensive than conventional motors and incentives are essential to make these vehicles affordable for the customer.
âThe reduction in grant and eligibility places the UK even further behind other markets, markets that increase their support, making it even more difficult for the UK to get sufficient supply.
“This sends the wrong message to the consumer, especially private customers, and to an industry challenged to meet the government’s ambition to be a global leader in the transition to zero-emission mobility.”
RAC’s head of highway policy Nicholas Lyes said the auto industry has been hit hard by the pandemic and incentives to get consumers to go green remain “vital” in encouraging the sale of clean new cars .
âEven as more and more models are entering the market, our research suggests that initial cost remains a concern for drivers when comparing the cost of an electric vehicle with a conventional vehicle of similar size,â he said. he warned.
âBy reducing the subsidy, the government can take the risk that people will keep their older, more polluting vehicles longer. “
The government has set a goal of phasing out the sale of new conventional gasoline and diesel cars and vans by 2030 in order to tackle climate emissions and air pollution from combustion-engine vehicles.
Nearly 11% of new cars sold last year had a hold, up from 3% in 2019, as the number of plug-in cars sold more than doubled as overall vehicle sales fell in the face of the pandemic.
The plug-in grant scheme was renewed last year, with funding of Â£ 582million for eco-friendly cars, motorcycles and vans set to last until 2022/23.
As battery prices drop, manufacturers can increase the range of electric vehicles – the distances cars can travel between charges – and make them more affordable.
The government has said tax incentives, including company car prices, which can save drivers more than Â£ 2,000 a year, will remain in place.
It is also investing Â£ 15 billion in alternatives to driving, including funding for buses, cycling, rail networks and local urban transport, the DfT said.