Shocker: Cutting Grants For Plugin Vehicles In UK Will Reduce Plugin Vehicle Sales

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Most people these days realize that rapid climatic change poses a grave risk to human society and will lead to innumerable catastrophes. So, when a policy supporting clean technologies gets cut, or at least kneecapped, the logic is confusing and the decision is a bit infuriating. As an example, the UK government is reducing grants for plugin electric vehicles, just as many car buyers are making the shift to electricity (thanks in part to those government grants). It is expected that this will reduce electric vehicle sales. (Who’da thunk it?)

UK’s Reduced Support For Clean Electric Cars

“The UK government has announced[i] its intention to reduce grants for EV buyers from £3,000 to £2,500 (a further reduction from the £4,500 offered this time last year) while also decreasing the price cap for eligible vehicles from £50,000 to £35,000,” CarGurus summarized.

“According to new research commissioned by online automotive marketplace CarGurus, however, these steps are at odds with the actions which UK drivers say would be most likely to push them toward choosing an EV as their next vehicle.”

As I reported recently, plugin vehicle market share rose to 11% in 2020 and 13% so far in 2021. That’s a great step up from 1% in 2018 and 2% in 2019, but it’s still far from the finish line, and slowing down the transition makes little sense.

Chris Knapman, Editor at CarGurus UK, reiterates two core points I made above about this: “There’s no doubt that the rate of adoption of EVs will need to accelerate if the Government is to meet its ambition for the UK to be a world leader in transitioning to zero emissions motoring. As such it is a surprise to see that the grant for purchasing new EVs has been reduced yet again, particularly when our own research shows these grants are so important in the quest to drive EV adoption.”

Automakers Also Not Gung-Ho

It’s not just climate activists and other sane people who are not enthusiastic about the grant cut. The same goes for some automakers. After all, even ignoring the moral obligation to do what we can to fight climate change, businesses like certainty, and cutting a notable purchase incentive creates a lot of confusion and uncertainty. Automakers spend years planning their model rollouts and production plans. To have significant policy changes that affect what consumers will buy is not something they can always adjust too easily or quickly.

In response to the policy changes, several automakers have had to reduce the prices of certain EVs so that their buyers remain eligible for the grant. That’s an extra boost for consumers in the short term, but it does eat into automaker profits and could lead to less output or less ambitious plans in the medium term.

“Peugeot, Citroen, Kia and Vauxhall[ii] are among the brands to have announced price reductions to ensure their models remain eligible for the plug-in car grant.”

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Tax Gas & People Will Like Electricity More

The survey also found that higher gas taxes would lead to more people going electric. (A total shocker.) “Recent freezes in fuel duty for drivers of petrol and diesel vehicles are similarly unlikely to expedite electrification. In fact, the survey results indicated that if fuel prices reached £2 per litre, a third (34%) of drivers would be much more likely to consider an EV. While if they climbed to £3 per litre, over half (55%) of drivers would be more inclined to go electric.”

Charts — What EV Drivers Want & Need in UK

Below are a series of charts from CarGurus showing more nuance and details around the topics surveyed. After info on who the respondents were, there were results on how likely respondents were to go electric in the coming year, 5 years, or 10 years. They also indicated which moves would inspire them to go electric. The winning entry was getting more EV charging stations installed in the areas around the respondents’ homes, but it was not followed too far by more tax incentives or rebates — precisely the thing the UK government is cutting back on. Then you get to the completely common sense finding that higher fuel costs will lead to more EV purchases or leases.

In terms of brand trust, Tesla takes the cake in the EV market in the UK, with 21% of respondents saying they trust Tesla the most to develop EVs. That was far more than #2 BMW’s 12% or #3 Audi 11%, let alone Ford sitting at 7%.

We’ll see where the plug-in car grant goes and keep you updated, but it seems that the UK government is simply settling for fewer EV sales at the moment.