Plug-in car grant for EVs slashed by 40%

Department for Transport cuts grant amount and lowers qualifying price cap to ‘make money go further’

Wednesday, 15th December 2021, 10:44 am

(Photo: Nissan)

The government grant for buyers of electric cars has been cut for the second time this year, with the maximum value of eligible cars also reduced.

The Department for Transport announced that it was slashing the Plug-in Car Grant offered on EVs “to enable taxpayers’ money to go further”.

It insisted its investment in the transition to EVs was unchanged but was accused of sending “mixed messages”.

Sign up to our daily Derry Journal Today newsletter

The i newsletter cut through the noise

The PiCG has now been cut from £2,500 to £1,500, with reductions to grants on electric motorbikes and larger electric vehicles as well.

The change will affect a number of mainstream EVs

The threshold for eligibility has also been cut from £35,000 to £32,000, reducing the number of vehicles that qualify for the financial assistance.

The grant scheme has helped fund the purchase of more than 500,000 low-emissions vehicles and, with EV sales up 89% this year, the DfT says that cutting individual payments would allow “the scheme’s funding to go further and to help more people make the switch to an EV”.

However, industry experts said the move “smacks of short-termism” and could put drivers off making the switch, with only around 20 cars still eligible for the grant.

Transport minister Trudy Harrison said: “The market is charging ahead in the switch to electric vehicles. This, together with the increasing choice of new vehicles and growing demand from customers, means that we are re-focusing 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.

“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 charge points.”

Jim Holder, editorial director at What Car? said that the grant was instrumental in many drivers’ decision to go electric and incentives have proven to be successful elsewhere.

He said:  "Once again the Government is sending out mixed messages - it wants to promote environmentally-friendly transport, yet it is reducing the incentive to do so at a time when electric cars are still more expensive to buy.

“Manufacturers are working to ensure electric vehicles reach cost parity with their petrol and diesel counterparts, but this is still some years out. Until this happens, there should be adequate financial support to help those buyers on the fence to make the switch.

“With the 2030 ban on selling non-electrified cars looming, this move smacks of short-termism. The nations that have moved fastest to electrify their cars have incentivised and planned far more aggressively than the UK. We cannot aim to reach the end goal through hope alone.”

The RAC’s head of roads policy Nicholas Lyes said the cut was a “step in the wrong direction”.

He commented: “This disappointing cut means that only around 20 EV models are now eligible for the grant which doesn’t leave a great deal of choice for consumers.

“RAC research suggests that drivers already feel the upfront cost of electric vehicles is too high, so this has to be seen as a step in the wrong direction.

“While it’s true that sales of electric vehicles have been growing strongly, it’s worth noting that this is still from a relatively low base. We’re concerned the Government has taken this step too soon.”

Earlier this year, the DfT cut the PiCG from £3,000 to £2,500 and lowered the maximum value for eligible cars from £50,000 to £35,000. The move caught manufacturers by surprise and saw several cut prices or introduce lower-cost, lower-spec cars to ensure they still qualified.

The latest announcement also saw the DfT confirm plans to introduce new rules on charging infrastructure which would see providers forced to offer contactless payment all all fast and rapid chargers and offer means for motorists to compare costs across charging networks in a “recognisable format” similar to pence per litre at petrol stations.