7:53 am, April 20, 2024
The government has rejected recommendations to green light a wide range of proposals to accelerate the take-up of electric cars, which included the re-introduction of the electric car grant.
Yesterday (Apr 19), the government responded to a wide-ranging report written by the House of Lords Environment and Climate Change Committee, which outlined a series of suggestions on what is needed to help the transition to electric cars and allow the government to hit its ambitious targets.
Among the recommendations in the report, entitled EV Strategy: Rapid Recharge Needed, was the re-introduction of the plug-in car grant (PiCG) and levelling out the VAT difference between public and home charging.
The report, published in February, heard evidence from carmakers, charging firms and car dealers as part of the investigation. Writing in it, Baroness Parminter, chair of the inquiry, said: ‘The evidence we received shows the government must do more to get people to adopt EVs.
‘If it fails to heed our recommendations the UK won’t reap the significant benefits of better air quality and will lag in the slow lane for tackling climate change.’
The re-introduction of the PiCG was a key recommendation to support the transition to electric car ownership, and was seen as a shot in the arm to supercharge sales of private electric cars after they have been faltering in recent months. Carmakers such as Fiat supported the move to bring back the grant and called for its return.
The original grant, launched in 2011, slashed £5,000 off the price of cars with plugs. It was periodically downgraded before finally offering just £1,500 off the price of a plug-in car when it was axed in 2022.
The report said a new PiCG would ‘stimulate the affordable market’ and there should be an ‘exit strategy’ in place for the grant’s eventual withdrawal, but only price parity had been achieved.
However, the government disagreed.
In its response, published on April 19, it said: ‘Government grants have been in place for over a decade to help reduce the up-front purchase price of new EVs. All government grants are kept under review to ensure the best value for money for the taxpayer.
‘The plug-in car grant was closed to new orders on 14 June 2022, having injected £1.5bn in taxpayer funding to support the growth of the early electric car market.
‘In June 2022, the government published a public evaluation report, which highlighted that the plug-in car grant was vital in building the early market for electric vehicles. It then had less of an effect on demand than other existing price incentives, such as company car tax. In 2023, battery-electric vehicles represented 16.5% of new car sales in the UK.
‘The price gap for new cars has continued to decrease over the past few years. According to industry data, the purchase price premium of an EV – relative to an equivalent internal combustion engine vehicle – has dropped from around 50% in 2020 to around 40% in 2023.
‘With battery costs reducing and continued innovation, some external forecasts predict that some EVs could be around the same price to purchase as a petrol or diesel car by the end of the 2020s.
‘The government is targeting its incentives where they have the most impact and deliver the greatest value for money. Plug-in grants will continue until at least financial year 2024/25 for motorcycles vans, taxis, trucks and wheelchair accessible vehicles.’
The report also recommended incentives should be brought in to reduce the cost of used electric cars, but again, the government disagreed.
The government said: ‘Industry intelligence suggests that some EVs on the used market are now similar in price to their petrol and diesel equivalents.
‘The number of used EVs continues to rapidly increase. Data from the SMMT shows that, in 2023, used EV sales increased by 90.9%, increasing the pool of available vehicles.
‘The government chairs a working group with several stakeholders to ascertain potential barriers to the uptake of used electric vehicles. The government will consider all policy options, to address potential failures in the market.’
The report also recommended VAT on public charging be brought in line with domestic charging and slash VAT applied to public EV chargers from 20% to 5%.
But the government said it does not intend to do this as such a cut would ‘impose additional pressure on the public finances to which VAT makes a significant contribution’.
The committee’s recommendation to add petrol-station-like totem signs for electric cars at the side of motorways was also rejected, with the government saying the improvement of live and real-time charger information via apps and maps will offer the same level of service.
Commenting on the government’s response, Baroness Parminter, chair of the inquiry said: ‘Whilst we welcome the government’s acceptance of some of the recommendations in our report, it is particularly disappointing that it is not committing to incentivising the purchase of more EVs, equalizing the VAT differential between public and domestic charging, or addressing our concerns about barriers to charging in multi-occupancy buildings.
‘If implemented, these recommendations would help people to adopt EVs and ensure a smoother journey towards net zero. Peers will keep urging the government to do more, as otherwise the EV revolution is a non-starter.’
