Plug-in Car Grant axed: Government pulls plug on plug-ins

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Author: | Updated: 14 Jun 2022 10:57

The government has announced that the plug-in car grant (PICG) – a scheme in operation since 2011 – has been axed with immediate effect.

The scheme has been cut back in the past, with the amount on offer reduced from £2,500 to £1,500, but now the scheme has been cancelled completely.

Plug-in grant axed

Why has the grant been axed?

In its press release, the government says that the success in the UK’s “electric car revolution” is the main reasoning behind the decision, with future funding aimed at expanding charging infrastructure rather than EV uptake itself.

This includes a pledge to spend £1.6 billion of funding that aims to increased the amount of EV chargers ten-fold.

Trudy Harrison, transport minister commented: “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”.

The government also claims that the reduced costs of running an electric car often exceeds the £1,500 incentive, noting that EVs costing less than £40,000 continue to benefit from zero road tax and enticing BIK rates too.

Since the scheme began more than 10 years ago, more than half a million EVs have benefitted from the grant – a total contribution of more than £1 billion.

Outlander PHEV

Industry reaction

While the government claims the grant is no longer needed as an incentive for EV uptake, many disagree, including chief executive of the SMMT, Mike Hawes. He said the decision sends the wrong message to motorists and also comes at the worst possible time for the industry.

Ginny Buckley, founder of partner commented: “As the Government points out, sales of electric cars have risen by 70 per cent in the last year, and now represent one in six new cars on UK roads.”

But dig a little deeper and those figures reveal that a large proportion are registered to business users benefiting from financial incentives including salary sacrifice schemes and low benefit-in-kind.”

Fuel prices 2022 UK

Read more: Fuel costs 2022: Why are prices rising?

So are EVs still worth it?

In our opinion, definitely – particularly if you choose to lease one. While the government’s £1,500 incentive was a nice prospect, only 24 models on the UK market could benefit anyway, since the £32,000 cut-off was applied last year.

Also, the cost of EV technology has consistently dropped over the last few years, with an 89% drop in the price of battery production over the last decade. This means, when it comes to leasing at least, many EVs offer like-for-like costs with petrol and diesel models.

What’s more, spiralling costs of petrol and diesel mean that running an EV remains significantly lower than combustion-powered cars. A recent study found that the cost of filling up a 55-litre car stands at nearly £100, while charging an EV to travel the same distance costs just £37.

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