The government is cutting the Plug-In Car Grant by reducing the value of the subsidy provided for electric cars and limiting the number of eligible vehicles. From today (March 18, 2021), the grant, also known as the PICG, will fall from £3,000 to £2,500 per vehicle, and it will only be available for cars costing less than £35,000.
When it was first introduced in 2011, the PICG offered up to £5,000 off the price of a new electric or plug-in hybrid car. Over the years, the subsidy has been reduced for electric cars and effectively abolished for plug-in hybrids. Now, the subsidy has been reduced once more, dropping to half its original value, and becoming available for fewer models.
For buyers, this essentially means electric cars will become more expensive. The grant is paid to the manufacturer rather than drivers, so the change will be felt in the form of increased asking prices. Some vehicles will now effectively cost £3,000 more than they did yesterday, while cheaper models will be £500 more expensive.
The government says the change will make the funding last “longer” and mean more drivers can take advantage of the subsidy in the long run. Although the Department for Transport (DfT) confesses the move will make some cars more expensive, it says the more expensive vehicles are “typically bought by drivers who can afford to switch without a subsidy from taxpayers”.
“We want as many people as possible to be able to make the switch to electric vehicles as we look to reduce our carbon emissions,” said Transport Minister Rachel Maclean. “The increasing choice of new vehicles, growing demand from customers and rapidly rising number of charge points mean 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.”
The car industry has been scathing in its criticism of the decision, with one industry body calling it “ the wrong move at the wrong time”. The Society of Motor Manufacturers and Traders (SMMT), which represents the UK’s car makers and dealers, said it sent the “wrong message” to customers.
"The decision to slash the Plug-in Car Grant and Van & Truck Grant is the wrong move at the wrong time,” said SMMT chief executive Mike Hawes. “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, 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.”
And the RAC also panned the decision, accusing the government of failing to incentivise electric vehicles amid the economic turmoil caused by the recent health crisis.
“Ministers seem to talk the talk when it comes to encouraging people into cleaner vehicles, but cutting the plug-in car grant certainly isn’t walking the walk,” said RAC head of roads policy Nicholas Lyes. “While it’s understandable to focus grants on the affordable end of the market where there’s the best opportunity for greater take-up, the industry has been hit hard and incentives to get consumers to go green remain vital in encouraging the sale of clean new cars.
“The extent to which drivers might delay upgrading their vehicles as a result of the economic effects of the coronavirus is also yet to be seen, which makes the timing of this announcement all the more surprising. 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.”