Yesterday, the Government has announced the withdrawal of the plug-in car grant (PiCG) with immediate effect. All existing applications for the grant will continue to be honoured, including where the car has been sold in the two working days before the announcement, but an application for the grant from the dealership has not yet been made.
The scheme, which was worth up to £1,500 off an electric vehicle (EV), has been used to buy nearly 500,000 cars over the past decade. With battery and hybrid electric vehicles now making up more than half of all new cars sold, and fully electric car sales have risen by 70% in the last year, meaning one in six new cars joining UK roads are fully electric.
Since the launch in 2011, the grant has gradually been cut back from the original £5,000. With it being lowered to £4,500 in 2016 and then to £3,500 in 2018. Come 2020, the grant was £3,000 and cars over £50,000 were exempt before moving to £2,500 and a £35,000 cap last year. Finally, it was reduced to £1,500 before today’s announcement.
Why have the Government pulled the plug-in car grant?
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.”
What next for electric cars?
According to the Department for Transport, the constant reductions in the amount of the grant, and the addition of a cost cap, have had no impact on the increasing rate of sales of these types of cars.
Now, the Government plan on refocussing the funding of around £300million towards the main barriers to the electric vehicle transition, including the main cause of range anxiety, public charging, and the availability of it.
If you have any questions about what this means for you and your journey to electric, please do not hesitate to contact the TCH Leasing team who will be able to answer all your questions.