UK Govt To End Electric Vehicle Subsidy As Demand Rises

Highlights :

  • The UK government now wants to shift the funding to charging infrastructure and sales of other types of vehicles.
  • The move is driven by what the govt. sees as enough momentum towards EV’s that will not be impacted by subsidies any more.

The remaining subsidies on the electric cars for the buyers in the United Kingdom are coming to a closure after a reasonable run. The UK government is mulling to do away the benefits of £300 million to purchasers as the demand for electric vehicles is rising. The government says that the funds will then be utilized in expanding the EV charging network. It will also help in supporting other vehicles that are battery powered.

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In its new order, the Department for Transport said that the grants by now have been successful in creating a mature market for ultra-low emission vehicles. This resulted in immediate increase in the sales of electric cars. The sheer number of sales rose from a mere 1,000 in 2011 to about 100,000 in the first five months of this year alone.

The statement revealed that more than half of the new cars that are sold in the UK market are battery -powered and hybrid electric vehicles. The complete electric cars sales have also increased by a huge 70 per cent in 2021. The government also informed that presently one in six new cars that hit the UK roads is electric.

The Department of Transport stated that now the focus will be on expanding and strengthening the EV charging network for the public and the existing grant of £300 million will be used to heighten the sales of electric taxis, vans, trucks, motorcycles and wheelchair accessible vehicles. The announcement of the same was made last year.

The statement also mentioned reductions made in the grants previously did not yield much result in improving the demand of the electric cars. Hence the government now wants to shift the funding to charging infrastructure and sales of other types of vehicles.

Backlash from the Industry

The industry is expectedly happy with the move that new investments in charging infrastructure will help the electric vehicle industry but removing the subsidy from the purchase of EVs is hugely disappointing. The Society of Motor Manufacturers and Traders (SMMT) maintains that today, the United Kingdom is the only big European country that is left with no incentives for electric vehicles.

SMMT said that the scrapping of the plug-in car grant actually sent a wrong message to motorists and to an industry which remains committed to the government’s net zero ambition. It was held that sales of new cars are already declining.

The UK lesson, for what it is worth, will not really apply to a market like India, for the simple reason that EV’s in private hands have hardly made that sort of penetration yet. Secondly, subsidies in India have generally been getting more targeted, from stingy limits earlier to more focus on public transport now.

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