UK cuts down EV subsidies with immediate effect
On Wednesday, the British government announced a cut down of the subsidies for electric cars, vans, trucks, and PHEVs with immediate effect. It says it’s “targeted at more affordable models to allow more people to make the switch.”
Subsidies for full-electric cars decrease from 3 000 pounds (€3 510) to 2 500 pounds (€2 925) and only for EVs under £35 000 (€40 956). That threshold is £15 000 less than before, sidetracking many fancy premium cars, including Tesla’s Model 3, which retails in the UK at £40 490.
Tesla lobbying in vane
According to the newspaper The Guardian, Tesla had just been lobbying hard to have the UK raise taxes on ICE cars and PHEVs to finance more subsidies and a VAT exemption for battery-electric vehicles. It looks like the attempt backfired.
The official government statement of the Department of Transport says the number of EVs under £35 000 available on the market has increased by more than 50%. As an example, the Hyundai Kona 39kWh and the MG ZS EV are given on the website. Hence the decision to lower the threshold.
Available to more drivers
“This will mean the funding will last longer and be available to more drivers. Grants will no longer be available for higher-priced vehicles, typically bought by drivers who can afford to switch without a subsidy from taxpayers,” Transport Minister Rachel Maclean said.
Last year in March, the UK decided to set aside £403 million for the plug-in car grant (PICG), extending it to 2022-23. And it worked, the government says. In 2020, 11% of new cars sold in the UK had a plug, full-electric car sales tripled in the same period.
Freezing fuel excise for 10 years
The UK’S plug-in car grant scheme has been in place since 2011 to support the uptake of ultra-low emission vehicles. Initially, you could get a £5 000 subsidy for all eligible ultra-low emission cars, sharpened in 2018 to focus more on zero-emission cars. In March 2020, the threshold of a list price of £50 000 and a maximum of £3 000 subsidies was installed.
Tesla’s suggestion to beef up taxes for cars with an internal combustion engine (ICE) or even PHEVs didn’t fell on fertile ground. Politicians hesitate to rub their voters up the wrong way by touching fuel prices, fearing things to derail like in France with the Yellow Vests.
The Conservative government in the UK instead decided in February to freeze fuel excise for ten years at 58 pence a liter after a fierce campaign by British tabloid newspapers. According to The Guardian, this will cost the government £50 billion (€ 58,5 billion) in revenues.