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'Wrong time'

Government criticised for electric vehicle grant cut

Jaguar electric car

Motorists are being driven towards electric cars

UPDATE 19 MARCH: The government has been criticised for cutting grants aimed at encouraging people to buy electric vehicles.

The Department for Transport will reduce the grant from £3,000 to £2,500 and restrict it to cars priced under £35,000.

The Society of Motor Manufacturers and Traders (SMMT) said it is “the wrong move at the wrong time” and goes against the government’s zero emissions ambitions.

Matthew Fell, chief UK policy director at the CBI, said: “While long-term reductions in consumer incentives for electric vehicles are inevitable, this is the wrong time to stunt a green recovery by making a sudden change to the grants on offer. 

“With a stretching 2030 target in place to phase out sales of new petrol and diesel cars and vans, we must avoid sending mixed messages to consumers and businesses.

“Switching to an electric vehicle still has many barriers, including high upfront costs and availability of reliable charging points. 

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“A clear and consistent pathway for incentives will ensure business can continue to deliver the government’s ambitions for reducing transport emissions. By providing new electric vehicle models and installing the necessary infrastructure, we can make rapid transition a reality.” 

Jamie Hamilton, head of electric vehicles at Deloitte, said: “Electric vehicles have become an increasingly viable option for consumers, growing their UK market share to 11% in 2020.

“However, where similar incentives have been reduced in other countries, the sale of EVs subsequently fell.

“Today’s announcement is likely to impact on some sales but it is important to make clear that this isn’t the removal of all incentives. Others remain in certain parts of the market (sub £35,000) and in other forms, such as benefit in kind taxes.

“Likewise, there are significantly lower operating costs, such as fuel and maintenance, and investment in infrastructure also continues to support the rollout of EVs.”

Chris Black, commercial director at LeasePlan UK, commented: “The decision to announce and change plug-in grants on the same day has taken the industry by surprise, and the lack of notice hasn’t allowed businesses to proactively manage the situation.

“Whilst the instantaneous change will minimise a spike in claims, it has resulted in a great deal of disruption for customers and many across our industry. How this will affect the rapidly growing EV market remains to be seen. 

“Taking a step back, it’s possible to see both positives and negatives. By limiting the grant to cars costing less than £35k and reducing it by £500, the government is ensuring that more people will benefit over a longer period of time. 

“What’s problematic and potentially harmful is the timing: many motorists were just waking up to the cost saving and environmental benefits of EVs.

“Combined with other grants and subsidies such as lower Benefit-in-Kind (BiK) tax and 0% Vehicle Excise Duty (VED), the plug-in grant provides drivers and fleet operators with a strong incentive to make the switch to EV. By reducing or taking away these benefits, the government risks undermining its own messages around decarbonisation and ‘building back green’ post pandemic.”

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