Bring back plug-in car grant to boost EV sales again, says SMMT …

The SMMT is urging the government to bring back the plug-in car grant that it ditched out of the blue last year.

The grant – aimed at helping people make the switch to expensive EVs – originally stood at £5,000 when it was brought in in 2011.

However, it was gradually whittled down, eventually ending at £1,500 on cars costing less than £32,000, before being scrapped in June 2022.^[1]

At the time, the Department for Transport said the cash incentive was having little effect on rising new car sales, adding that the grant had only ever been a temporary initiative.

In October, though, it made a concession by extending the delivery period ^[2] from 12 months to 18, with orders having to be placed by March 31, 2023.

Now, in an article in The Times ^[3], SMMT chief executive Mike Hawes says the growth in EV sales is ‘flatlining’ so more needs to be done again to get larger number of people buying electric vehicles.

He said not enough people were saying they would buy an EV to meet net zero targets but its research had shown that financial incentives would encourage them to switch sooner.

‘More models are coming to market, but EVs remain more expensive to produce than their fossil fuel counterparts due to higher raw material, energy and technology expenses.

‘Helping consumers to overcome the cost barrier is crucial to boosting demand.

‘The UK has the most ambitious timeline for transitioning to EVs of any big market — but no consumer incentives. By contrast, EU buyers receive up to €8,000 (circa £7,000) per electric vehicle,’ he said.

Hawes also called for the VAT on EVs to be reduced, in line with carbon-reduction technologies, as well as bringing the VAT levied on public charge points down from 20% to the 5% for home charging.

This, he said, ‘would end unfairness for those without a driveway’ as well as encourage investment in charge points, thereby ‘tackling another of the biggest barriers to customer confidence’ and bolster the used EV market.

Hawes added: ‘Investing in a small tax cut would deliver a significant return by supporting the EV market, reducing production costs, bolstering the economy and delivering significant environmental benefits.’

And he emphasised that the industry wasn’t seeking handouts, rather investment support for people ‘to ensure a fair transition and the delivery of Britain’s net zero targets’, warning: ‘To do otherwise is to imperil that ambition.’

But consumer website The Car Expert founder Stuart Masson opposed the idea, saying: ‘Electric cars can already stand on their own two feet — or four wheels — when it comes to costs.

‘We don’t need the government to bring back grants to subsidise them.’

He pointed out that although the car industry complained each time the grant was cut that it’d kill demand, the opposite happened. The prices of EV models were also reduced to compensate for the grant reduction.

Masson added: ‘Market economics have been bringing the price of EVs down for a decade and they’ll keep coming down.

‘By the time that anyone is “forced” to buy an electric car sometime in the late 2030s, when stocks of used petrol and diesel cars start to seriously diminish, the prices will almost certainly be cheaper than an equivalent petrol car.

‘Battery range will also be significantly greater and charging times will be substantially reduced, which also addresses two of the other concerns for car buyers.’

But he also said the ‘inadequate charging infrastructure’ in the UK ‘desperately needs progress and leadership’.

References

^{^} being scrapped in June 2022. (cardealermagazine.co.uk)
^{^} extending the delivery period (cardealermagazine.co.uk)
^{^} The Times (www.thetimes.co.uk)