Automakers lobby to keep £5000 EV grant

Fears that the Plug-In Car Grant could be dropped

By Gavin Conway on November 25, 2011 5:16 PM

The £5,000 incentive available in the UK to those buying electric vehicles such as the Nissan LEAF and Mitsubishi i-MiEV could be under threat.

The Chancellor George Osborne will make his autumn statement next Tuesday, 29 November – that’s when he’ll give an update on the state of the economy and outline tax and spending plans. The worry is that with the economy still struggling, he’ll ditch the £5,000 Plug-In Car Grant.

The grant is due for review in early 2012, so the Society of Motor Manufacturers and Traders (SMMT) has got its pitch in early, writing to the Chancellor and urging him to continue support for the grant, reports greenwisebusiness.co.uk.

The SMMT has gone even further and is asking that light commercial EVs be included in the incentive program. At the moment, buyers opting for vehicles like the Renault Kangoo Z.E. pure-electric aren’t eligible for the grant.

One of the reasons that the SMMT is worried about the grant’s future is the lower than expected take-up of electric vehicles. To the end of October this year, just 1,221 vehicles had been purchased using the grant. In its defence of the incentive program, the SMMT points out that the 2011 sales figure represents an 800% improvement on 2010, when just 116 EVs were sold. Many industry insiders also point out a supply-side bottleneck and the intended steady roll-out of electric vehicles rather than a market flood. The government had set a limit of 8,000 individual grants for the year.

We’re with the SMMT on this one – it would be a huge mistake to pull the Plug-In Car Grant in 2012. At the moment, the most credible EV rivals to petrol and diesel-fueled family cars are the Nissan LEAF and Mitubishi i-MiEV. Next year, they will be joined by the Chevrolet Volt/ Vauxhall Ampera, as well as the Renault Fluence Z.E. family saloon and Zoe hatchback. Ford will also bring its pure-electric Focus to market.

The point is, car buyers will suddenly be faced with a much wider choice of credible, practical EV family cars. But until the sales volumes increase substantially, these EVs will remain comparatively expensive (although owners will claw that back in greatly reduced running costs). So if the government is really serious about carbon reduction, incentives like the £5,000 Plug-In Car Grant are crucial in the medium term.

Besides, the government earmarked £40 million for the grant in 2011 and only spent £6.1 million. Even if EV sales triple in 2012, that’s still less than half this year’s grant allocation. So come on, George, hands off the grant.

Source: greenwisebusiness.co.uk