Government planning to end plug-in car grant on EVs

Tags: #government-ev-policies #ev-ownership #ev-cost-of-ownership

A year after the government pulled the metaphorical plug on the plug-in car grant (PiCG) for cars that emit over 50g/km and travel less than 70 miles on electricity (i.e. PHEVs), it has now mooted the idea of turning off the power for pure EVs, too.

In an interview with The Times, Transport secretary, Grant Shapps, stated in no uncertain terms that the DfT plans to get rid of the £3500 that currently makes buying an environmentally-friendly EV less of a hit in the wallet. He said: “I make no bones about it. We want to remove all the subsidy. So you can see this in two ways. If you are out there reading this, thinking of buying an electric car, buy it while the subsidy’s there, because it will go eventually.”

Shapps didn't mention any timeframe for phasing out the grant, but has already ensured that he's helped himself to his slice of the remaining pie, having recently bought a Tesla Model 3. As such he is, of course, positive about the PiCG as-is in “helping people switch to the emissions-free cars of the future”, but he added that the government can't guarantee “lots of extra public bungs of taxpayers’ cash so you can buy your new car”.

This apparent bolt from the blue from Shapps rose more than a few eyebrows here at Discover EV; the statement came from nowhere and hasn't exactly received lashings of coverage. It evidently wasn't a reckless slip of the tongue, but equally it's not a publicised policy or statement of government – from what we can tell. We have approached the DfT for clarification on Shapps' comments and they assured us they'd get an answer over, but at the time of writing they are yet to respond.

Phasing out the PiCG is also very much at odds with the government's recent commitment to achieving net zero emissions by 2050 – which did receive a lot of media attention. The then Prime Minister, Theresa May, said: “Now is the time to go further and faster to safeguard the environment for our children. We must lead the world to a cleaner, greener form of growth.”

Cutting the PiCG doesn't exactly show willing to follow through with 'leading the world to a cleaner, greener form of growth'. Moreover, since the PiCG was effectively cut to PHEVs last year (technically it hasn't been cut, it's just that no PHEV on the market meets the criteria), the sales of what many believe to be fantastic and practical half-way house between ICE and EVs have tanked. Year-to-date, the PHEV market share is down minus 29.2 per cent and September has been the only month of sales growth in the sector for almost 12 months according to figures from the Society of Motor Manufacturers and Traders (SMMT).

We spoke to the SMMT on the subject of the removal of the PiCG and their message remains entirely consistent with its unequivocal support of policy that encourages and enables people to afford to purchase and run environmentally-friendly vehicles. It's worth reading the SMMT's comments on the effective removal of the PiCG from PHEVs last October when the organisation urged the government to rethink its policy.

Back then, SMMT Chief Executive, Mike Hawes, said: “We understand the pressure on the public purse but, given the importance of environmental goals; it’s astounding that just three months after publishing its ambitious vision for a zero emissions future, government has slashed the very incentive that offers our best chance of getting there.”

And in September this year that message resonated once again, with Mike Hawes commenting: “To support a smooth transition and deliver environmental gains now, we need a long-term government commitment to measures that give consumers confidence to invest in the latest technologies that best suit their needs.”

Of course, government needs to be pragmatic when it comes to how it spends public money. It has to tread a fine line between incentivising people into cleaner personal transport, and simply helping those who are probably already able to afford it to get an EV at a discount.

We recently reported on the normalisation of EVs, including results from a consumer study undertaken by Go Ultra Low (who we approached for comment but at the time of writing have not gotten back to us). And it's this furrow of normalising EVs that Shapps seems to want to plough in terms of policy.

“I see government’s role as being to kick-start the market, to put in sufficient charging points, because not everybody will be able to achieve it at home. I have a drive I can put a charging point on and there happens to be a supercharger down the road. That influenced me to order the car — the fact I knew there was a charging point within a mile or two.” 

There is merit in his comments and there are – and continue to be – numerous grants and inputs of money into schemes designed to improve infrastructure.

However, we have reported in a previous news piece that, “in off-the-record chats as well as general, industry-wide murmurings, there is a quiet dissatisfaction with the efforts the UK government has so far made to support the uptake of EVs and other alternatively fuelled vehicles.”

This satisfaction probably won't be so quiet when the PiCG falls victim to monetary reshuffling. It's also interesting to note that both the Labour party and Liberal Democrats’ policies run against the Conservative grain. For instance, the Labour Party would seek to introduce a £2000 'scrappage scheme' on petrol and diesel cars over 10 years old being traded in against a 'green' alternative. It would allocate £3.6 billion on infrastructure, such as public chargers, and would also look to offer interest-free loans of up to £33,000 for certain demographics and businesses to afford EVs.

The Lib Dems, on the other hand, want to bring forward the banning of new petrol and diesel car sales to 2030. They’d also reverse the cuts to EV subsidies and actually seek to extend them, as well as implementing a planning policy that is far more EV-friendly.

Another consideration that the DfT and wider government will be wrangling with is the loss in revenue generated from fuel sales – which could be up to £28 billion according to The Institute of Fiscal Studies (IFS). The think tank states that not only would fuel revenue disappear it wouldn't be made up for by an increase in electricity usage.

The IFS said that the best compromise solution for making up the revenue shortfall would be in road pricing – effectively a per-mile tax on driving with a rate that varies depending on location and time. Think of it as a permanent congestion charge which covers the entire country. But of course, this is just one idea.

Ultimately, the government does need to save and make money somewhere. Given the recent worldwide focus on the climate emergency, quite whether removing the PiCG is a good victim is debatable at best and extremely short-sighted at worst.

We will continue to press the DfT for clarification on Shapps' remarks as, whilst the PiCG isn't necessarily in imminent danger, it's important for EV owners and buyers to be informed. It's also important in this time of utter uncertainty that the UK car industry knows where it stands as well as what policy it is – and will be – dealing with. We'll be sure to follow up, so watch this space!