The maximum grant for electric cars has been reduced to £2,500 with immediate effect on Thursday, from £3,000. The government has also lowered the price cap for cars eligible for the subsidy from £50,000 to £35,000.

The grant is now targeting less expensive models, the DfT says, as drivers purchasing cars worth more than £35,000 can afford to do so without Government subsidy.

Nearly 11 per cent of new cars sold in 2020 had a plug-in-grant, compared with three per cent in 2019. The plug-in car grant was renewed last year, with the Treasury allocating £582 million to last until 2022-23.

The grant was originally introduced in 2011, with the Government having handed out £1.3 billion of funding since then. This has supported the purchase of 285,000 vehicles.

The Government has indicated in the past that the grant would be reduced over time, although financial support for electric vehicles will continue through tax incentives, such as lower VED (road tax) and Benefit-in-Kind company car tax.

The DfT added that as the EV market develops further, it expects to see a reduction in vehicle prices as the cost of batteries also drops.

Mike Hawes, chief executive of the Society of Motors Manufacturers and Traders, a lobby group, said: “The decision to slash the plug-in car grant and van and truck grant is the wrong move at the wrong time. New battery electric technology is more expensive than conventional engines and incentives are essential in making these vehicles affordable to the customer. Cutting the grant and eligibility moves the UK even further behind other markets, markets, which are increasing their support, making it yet more difficult for the UK to get sufficient supply.

“This sends the wrong message to the consumer, especially private customers, and to an industry challenged to meet the government’s ambition to be a world leader in the transition to zero-emission mobility.”

CIHT see the shift to electric vehicles as a key step in decarbonisation and acknowledge that support from government to encourage people to shift to EVs is important.  The reduction in the grant will hopefully not slow the transition required.  

CIHT recognises the importance and urgency of addressing climate change and launched a series of commitments in response to the climate change challenge.

On 27 June 2019 the UK legislated for net-zero carbon emissions by 2050 (2045 in Scotland). Now the UK Government must show it is serious about meeting its obligations. Organisations and individuals also must play their part – including professional bodies and their members.