– UK government pushes back on reintroducing grant to reduce EV prices
– Response to House of Lords report recommendation for targeted grants for EV purchases
– Previous Plug-In-Car grant ended a couple of years ago after injecting £1.5bn of taxpayer money
– Government believes other incentives like company car tax have greater impact on demand for EVs
– Predicts narrowing price gap between EVs and petrol/diesel cars as battery costs decrease
The UK government has responded to a House of Lords report that suggested reintroducing grants to lower the cost of electric cars, specifically rejecting the idea of a new subsidy. While it acknowledged the importance of the former Plug-In-Car grant in supporting early EV growth, the government believes that other existing price incentives, like company car tax, have a more significant impact on demand for electric vehicles. It also anticipates that the price gap between EVs and traditional cars will continue to narrow as battery costs decrease.
Fiat has expressed concern that the EV market for private buyers is in jeopardy, with fewer than one in five new electric cars registered in 2024. The company argues that the biggest barrier for retail electric car buyers is price and suggests that reintroducing a government grant could help reduce the upfront cost of EVs. The Society of Motor Manufacturers and Traders boss, Mike Hawes, has also emphasized the need for support for private buyers to facilitate the transition to electric vehicles and achieve ambitious net zero targets.
The government’s decision not to reintroduce grants for EVs has been met with criticism from industry experts who believe that incentives for private buyers, such as temporarily reducing VAT on purchases, reforming vehicle excise duty, and equalizing VAT on public charging, are essential for driving the rapid market transformation needed in the UK. While fleet uptake of EVs continues to grow, there is a lack of support and encouragement for private customers to switch to electric vehicles. Manufacturers are providing compelling offers, but they cannot fund the transition indefinitely on their own.
Despite the pushback from the government on reintroducing grants for EVs, it has agreed with some recommendations in the House of Lords report and recognizes the importance of previous incentives in building the early market for electric vehicles. The government aims to target its incentives where they have the most impact and deliver the greatest value for money, focusing on areas like electric van buyers. However, stakeholders in the industry continue to advocate for measures that will make the transition to electric vehicles more accessible and affordable for private buyers, ensuring a fair and rapid market transformation towards a more sustainable future.
In conclusion, the debate over the reintroduction of grants to reduce EV prices in the UK highlights the challenges and opportunities in transitioning to electric vehicles. While the government has chosen not to implement new subsidies, industry experts and stakeholders emphasize the importance of supporting private buyers and implementing incentives to drive the widespread adoption of electric cars. As technologies evolve and costs decrease, finding a balance between regulation, incentives, and market forces will be crucial in achieving the UK’s net zero targets and transitioning towards a more sustainable transportation sector.
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