The British government has again adjusted its electric car subsidy downwards. Both the subsidy rate and the price cap for eligible electric cars have been slightly reduced. There are also new subsidy rules for other electric vehicle types such as vans, motorbikes and mopeds.
After the subsidy for the purchase of electric cars was already reduced from 3,000 to 2,500 pounds per vehicle and the price cap for eligible electric cars from 50,000 to 35,000 pounds in March 2021, the next step now follows: With immediate effect, the subsidy will drop to 1,500 pounds and the price cap to 32,000 pounds. This means that in future there will be the equivalent of 588 euros less per vehicle; the new price limit is around 37,650 euros.
According to the announcement from the Ministry of Transport, the government funding is aimed at “more affordable zero-emission vehicles as the market moves towards an electric future”. With the new price cap, around 20 models are still eligible for funding.
Slightly higher funding rates apply to wheelchair accessible vehicles, where there is a grant of £2,500 for vehicles up to £35,000. Support for these vehicles will also be prioritised, with the overall budget for the grant remaining unchanged.
“The market is charging ahead in the switch to electric vehicles. This, together with the increasing choice of new vehicles and growing demand from customers, means that we are refocusing our vehicle grants on the more affordable vehicles and reducing grant rates to allow more people to benefit, and enable taxpayers’ money to go further,” says Transport Minister Trudy Harrison.
Large vans will be subsidised at £5,000, smaller ones at £2,500. Electric motorbikes up to a price cap of 10,000 pounds will be subsidised with 500 pounds, the purchase of an e-moped with 150 pounds.
In addition, the government plans to introduce regulations next year “that will boost confidence in our electric vehicle charging infrastructure”. For example, new charging points with 7.1 kW and more must enable contactless payment. In addition, there will be an easier way to compare prices – but details are not yet known.
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Watch the manufacturers suddenly finding the savings to cut their prices again to fall beneath the cap. With energy prices going north, it’s going to be harder to justify using low wage tax payers pounds on subsidizing middle class car buyers, whilst public transport remains underfunded. Watch this subsidy die in the next year
The amount of funding remains the same while the number of people buying EV has risen by over 100 % in the past year. The lower subsidy is introduced, so that more people can avail the benefit rather than few. To compensate the low subsidy, UK government is strategically driving the prices down by lowering the cap. This is an ingenious plan that should be adopted going forward.
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