Oliver Rix, Partner in Energy & Resources at
Baringa Partners, responds to the announcement by the Department
for Transport that new grant levels for electric vehicles have
now come into force:
“The announcement that the Government has effectively
scrapped the grant for plug in hybrids, and significantly reduced
the grant for pure electric cars, is disappointing. Plug-in car
grants are an essential support for both consumers and the motor
industry in the early stages of the transition towards the
Government’s goals for 100% electric vehicles. As we’ve seen in
the Netherlands, scrapping or substantially reducing financial
support can have disastrous consequences – there, sales dropped
from over 40,000 plug in hybrids in 2015 to less than 2,000 in
2018 when changes to tax rules were made.
"However, the Government does face a
challenge. If EV uptake continued on par with the pathway
the Committee on Climate Change has indicated would be in line
with future carbon budgets, sales would reach around 250,000 by
2020 – which based on current grants would represent a subsidy
cost of up to £780m that year. Further, whilst plug in
hybrids have short term benefits in alleviating range and
re-charging issues whilst getting zero emission-capable vehicles
on the road, it is right that the long term trajectory focuses on
100% electric vehicles as range, charging infrastructure and
model availability improve.
"The question is how to manage a transition as EV
vehicle costs decline, without significant risk of stifling the
momentum that has been building. Just as the Government is
looking at ramping up its long term ambition in light of the
IPCC’s recent report, which revealed the dangers of missing the
Paris Agreement by .5 degrees C, this decision is too much of a
cut too soon. Electric car uptake had been one of the key success
stories of the UK’s Road to Zero ambitions, but removing the
grant could put electric cars beyond the reach of consumers.
Ahead of Monday’s Budget, we are urging the Government to
reconsider this policy, which could put electric car uptake into
reverse.”
