The Plug-in Car Grant for pure electric cars has been reduced from £3,000 to £2,500, with the list price cap also reduced from £50,000 to £35,000.
The changes are effective immediately from today (18 March 2021).
These measures have been taken to ensure the funding lasts longer, says the government.
The £50,000 price cap has been lowered to £35,000 because higher-priced vehicles are ‘typically bought by drivers who can afford to switch without a subsidy from taxpayers’.
Cars now excluded include the Tesla Model 3, as driven by transport secretary Grant Shapps. Several times last year, the Model 3 was Britain’s best-selling car in the monthly registration rankings.
As the number of sub-£35,000 EVs has increased by almost 50 percent since 2019, argues the government, more than half the models currently on sale will still be eligible for the grant.
Ministers highlight the Volkswagen ID.3 Pro (pictured above), which now costs from just over £29,000 once the reduced Plug-in Car Grant is deducted.
“While the level of funding remains as high as ever,” said transport minister Rachel Maclean, “given soaring demand, we are refocusing our vehicle grants on the more affordable zero emission vehicles – where most consumers will be looking and where taxpayers’ money will make more of a difference.
“We will continue to review the grant as the market grows.”
Officials add that the government has been clear about its intention to reduce the Plug-in Car Grant since 2018.
Back then, plug-in hybrid cars (PHEVs) were excluded from the scheme, angering the car industry.
“We are retaining support for the switch to electric vehicles through other new investments. Today’s changes are the latest step in this.”
In the March 2020 Budget, chancellor Rishi Sunak cut the Plug-in Car Grant from £3,500 to £3,000.
“The government argued at the time the move would “allow more drivers to benefit from making the switch for longer”.
The Plug-in Car Grant currently has £582m of funding allocated, which is ‘intended to last until 2022 or 2023’.
‘Wrong move at the wrong time’
The car industry has expressed its frustration over the sudden move. SMMT chief executive Mike Hawes called it “the wrong move at the wrong time.
“New battery electric technology is more expensive than conventional engines and incentives are essential in making these vehicles affordable to the customer.
“Cutting the grant and eligibility moves the UK even further behind other markets, which are increasing their support, making it yet 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 world leader in the transition to zero emission mobility.”
Ford of Britain Chairman Graham Hoare called the news “disappointing and is not conducive to supporting the zero emissions future we all desire.
“Robust incentives – both purchase and usage incentives – that are consistent over time are essential if we are to encourage consumers to adopt new technologies.”
The NFDA, which represents car dealers has called the move “extremely disappointing as it risks undermining the progress the UK has bene making towards a zero-emission market in line with the 2030/2035 deadline set by the government”.
Chief executive Sue Robinson says the NFDA has “repeatedly highlighted that we must avoid a situation where the least well-off drivers are deterred from buying a new, low-emission vehicle when the times comes to replace their old one.
“The cost of the electric cars currently available on the market remain higher than their petrol or diesel counterparts and it is vital that buyers continue to be incentivised.”
RAC head of roads policy Nicholas Lyes said that although ministers talk-the-talk on encouraging people into cleaner vehicles, “cutting the Plug-in Car Grant certainly isn’t walking the walk.
“Even though more models are coming on to the market, our research suggests upfront cost remains a concern to drivers when comparing the cost of an electric vehicle with a similarly sized conventional vehicle.
“By cutting the grant, the Government may risk people holding on to their older, more polluting vehicles for longer.”
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