The government closed its plug-in car subsidy scheme for new orders yesterday (14 June 2022) after successfully launching the UK’s electric car revolution and supporting the sale of nearly half a million electric vehicles.
The program has successfully created a mature market for ultra-low emission vehicles and has helped increase sales of pure electric vehicles from less than 1,000 in 2011 to nearly 100,000 in the first five months of 2022.
Battery and hybrid electric vehicles now account for more than half of all new car sales, with sales of pure electric vehicles rising by 70% last year and now accounting for one in six new cars on UK roads.
The government has been clear that the plug-in car subsidy is time-bound and funding has been confirmed until 2022-23. The gradual reduction in the scale of subsidies and the number of models covered has little impact on the rapid growth in sales or the continuous expansion of the range of production models.
As a result, the government is now refocusing funding on key barriers to Electric Vehicle transition, including public charging and supporting the purchase of other road vehicles needed to further develop Electric Vehicle transition.
To continue the government’s drive towards net zero and ensure effective use of taxpayer funds, £300 million in grant funding will now be refocused towards extending plug-in grants to boost sales of plug-in taxis, motorcycles, vans and trucks and wheelchair accessible vehicles, as announced in the autumn statement.
The shift in focus will also help allow government funding to target expanding the public chargepoint network, helping to eradicate “range anxiety” and ensure the transition to zero-emission transport is easy and convenient for all drivers across the UK. The government has already committed £1.6 billion to building the UK’s public chargepoint network.
Significant savings in running costs compared to petrol or diesel equivalents can often exceed the current grant value of £1,500, and Electric Vehicle drivers will continue to benefit from generous incentives including zero road tax and a favourable corporate car tax rate.
All existing subsidy applications will continue to be considered, and if a car has been sold within 2 business days prior to the announcement without a dealer subsidy application submitted, the sale will continue to be eligible for the subsidy.
Transport Minister Trudy Harrison said:
“The government continues to invest record amounts in the transition to EVs, with £2.5 billion injected since 2020, and has set the most ambitious phase-out dates for new diesel and petrol sales of any major country. But government funding must always be invested where it has the highest impact if that success story is to continue.
“Having successfully kickstarted the electric car market, we now want to use plug-in grants to match that success across other vehicle types, from taxis to delivery vans and everything in between, to help make the switch to zero emission travel cheaper and easier.
“With billions of both government and industry investment continuing to be pumped into the UK’s electric revolution, the sale of electric vehicles is soaring.
“We are continuing to lead the way in decarbonising transport, with generous government incentives still in place, while creating high-skilled jobs and cleaner air across the UK.”
Over the past decade, government policies to encourage Electric Vehicle adoption helped EVs beat expectations with 39,000 new Electric Vehicle registrations in March 2022, more than all of 2019. Since its launch in 2011, the Plug-in Government Car Grant has provided more than £1.4 billion and supported the purchase of nearly half a million clean cars.
A new public assessment, released yesterday, highlights that while plug-in vehicle support is key to building an early-stage Electric Vehicle market, it will have less of an impact on demand as other existing pricing incentives such as corporate car tax continue to have a important influence. The report also found that the plug-in van market will benefit more from incentives to help companies and their fleets make the switch.
While benefiting from significantly lower running and refuelling costs – as low as 2p per mile, Electric Vehicle drivers can also expect to see a surge in cheaper, more reliable and quicker public chargepoints, as the government delivers its commitment to install 10 times more on-street chargers by 2030.
Since 2020, the government has allocated £2.5 billion for plug-in vehicles, infrastructure and the wider electric vehicle transition in the UK. The industry continues to drive the transition to greener vehicles by expanding its range of more affordable zero-emission vehicles. A total of 24 models are now priced under £32,000, up from just 15 a year ago, and the cost of monthly buy and lease plans has dropped significantly.
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