Scrapping incentives for plug-in hybrid vehicles so early on will deal a sizeable blow to a segment just finding its feet
Barely a month goes by where there isn’t blame being thrown at motorists for causing pollution problems in our towns and cities. The UK is also likely to miss its next CO2 reduction targets. So why has the government just scrapped the plug-in car grant for the majority of plug-in vehicles sold?
From the middle of next month the current subsidy programme for electrified vehicles will be overhauled completely. No plug-in hybrid on sale will be eligible for a list price discount, previously £2500 (and before 2016 £5000), while even the subsidy for full EVs will be cut by £1000.
The changes come just as electrified vehicles are gaining a foothold in the market, and a small one at that. Up until September this year PHEVs and EVs made up just 2.5% of all new cars sold in Britain. Yet the government claims the plug-in market is now “more established”, and grants are not needed to support it.
That just doesn’t add up, especially when consumers are supposed to be persuaded (rightly or wrongly) out of diesel cars.
Compare the UK’s situation to Norway – an exception but one that proves the success of incentives. Over half of all new cars registered there last year were plug-in hybrids or BEVs, and two of the best-selling cars are fully electric.
That’s unsurprising, because EVs are exempt from VAT, import and purchase taxes, can use many bus lanes, and even pay half-price fares for ferries. Granted, Norway has a massive soverign wealth fund to make that sustainable – and generates most of its own electricity from hydroelectric plants – but it seems counter-productive for the UK to scrap its relatively modest grant so early on in the electric revolution.
The other side of the argument is that, regardless of incentives, carmakers will be forced to sell electrified models in greater numbers in order to meet their fleet average CO2 targets. And it’s likely that more advanced PHEVs in future will be eligible for the updated grant, with cars with more than 70 miles of zero emission range eligible for the discount. But in the short term, the UK’s EV revolution is in real danger of being stifled.