Budget 2020: Electric car prices set to rise after Government slashes plug-in grant

Published 11 March 2020

Car buyers hoping to make the switch to electric will face higher prices from 12 March, after the Government admitted that the plug-in grant discount was being cut to £3000.

The Chancellor had initially been praised by commentators in the automotive industry when he announced that the Government was providing £403 million to extend the plug-in car grant to 2022/2023. 

However the optimism was cut short after just a few hours when the Department for Transport and the Office for Low Emission Vehicles issued a clarification note stating that the grant had been cut by £500. It was also revealed that cars costing more than £50,000 would no longer qualify for the Government-funded discount.

The new plug-in car grant rules came into force on 12 March, which leaves thousands of electric car buyers in limbo over the price of their next vehicle. As things stand, only plug-in car grant applications that were submitted before 11:59pm on 11 March are eligible for the £3500 discount. Applications submitted by car dealers after this timeframe will be subject to the new rate of £3000. 

The plug-in car grant scheme was introduced in 2011 to support the uptake of ultra-low emission vehicles. The grant rate was originally set at £5000 but has gradually been cut as electric cars have become more popular. 

The latest news will be a blow for the automotive industry in the UK with the number of new cars sold hitting a seven-year-low in 2019, with 2.3 million new vehicles being registered - the lowest figure since 2013. 

The market slump has also seen dealers cut staff and showrooms. Just a few weeks ago Ford announced it was set to close around half of its 400 dealers in the UK due to reduced demand for new vehicles. 

 

Comments

GTC20th    on 12 March 2020

So these clowns want us all to switch to EVs but make it even more expensive and seem to be doing very little to make it easier to charge them. It's petrol for me I'm afraid.

Chris Ottewell    on 12 March 2020

I cannot see a £500 reduction in the grant making any real difference. People are used to paying more than that for a slightly better trim level and probably 4 times that much for full leather. And if you are paying over £50K it's probably company funded anyway.

Cosmic674    on 12 March 2020

Totally agree Chris, your evaluation is spot on I believe.

   on 13 March 2020

Given that Electric car sales have roughly trebled in market share in just one year, it seems to be quite a modest reduction.

I would expect PHEV vehicles to lose their subsidy quite quickly when BEV get the range problem licked, which should only be a very few years.

   on 13 March 2020

what I cannot understand is why we as brits are allowing our government to cut the grant and not challenged them to why we have the lowest grant in the E.U. they say we are leading Europe to change our country to greener cars then surely it is right to be giving the best grant Holland , Belguim . France .Germany and Italy all give a grant of 10,000 euro's and have far more charging area's to use .So yet again we the good old British car owners take it on the chin again and again paying far more tax and stealth taxes to buy and keep our cars on the road .

Makram    on 14 March 2020

"why we as brits are allowing our government to ...to....to....to..........."

Because unlike other countries where the will of the people is very strong, where their govs take account, the uk elite and thier paid for brainwashing media propaganda have reduced us to submissive sheeple. BAA

Last time I remember, millions stood against tony blair and george bush against war in Iraq lies but guess what? it still happened and no one dared to say anything about it to date.

But millions are still dying.

You need to wake the hell up soon.

soldierboy 001    on 16 March 2020

Just for one Germany does not give £ or euro 10,000. It is just increasing the amount from 4000 euro to 6000 euro, so please check your facts before posting. I couldn't be bothered to check other countries because you probably just came up with a figure you thought good enough. By the way these grants come out of your taxes don't forget that.

soldierboy 001    on 16 March 2020

read wallbox.com/en_us/guide-to-ev-incentives-europe, nobody gives 10000 euro.

Edited by soldierboy 001 on 16/03/2020 at 11:04

gavsmit    on 13 March 2020

£500 is a drop in the ocean compared to the huge prices of EVs.

I have been watching the drastic increase in car price inflation for months - rather than manufacturers dropping the prices of their very expensive EVs, they've been dramatically increasing the price of their ICE cars to close the gap instead (e.g. over £23k for the entry level Golf).

The bottom line is that, even when the "government" (more like involuntary tax-payers, some of which don't drive or can afford an EV) grant was £5,000, it still wasn't enough to tempt me into a compromised, very expensive, EV (which have their own list of environmental challenges).

Only manufacturers dropping their prices will make me consider an EV - all the current grant is doing is going straight into the profits of car manufacturers rather than needy public services.

   on 13 March 2020

put more funds into ev charging

Kbee    on 13 March 2020

We took a serious look at the Kia e-Niro recently. It’s a great car, well equipped and the pure electric drive was great. At £25k we probably wouldn’t have hesitated but at £35k (after the Government Grant) it is just far too expensive.

Kia were giving no discounts whatsoever (and to be fair, they’ve no need to since there’s a long waiting list) yet it doesn’t take much effort to compare that price with the £22k new Mercedes A-Class (arguably a nicer / better car in terms of ride and quality) that’s advertised on this very web page from DrivetheDeal.

You’d have to be doing serious miles to save over £13,000 in fuel costs from electric vs petrol/diesel, yet EVs are best suited to shorter trips and regular commuting where you can charge up at home. The sums just don’t add up.

There is also a big question mark over residual values for EVs. With the technology advancing all the time, is anyone really going to want a Used EV with a worn out battery in 5-7 years time?

At least with a ICE car you know roughly what to expect.

I know I want an EV at some point, and when prices come into line with petrol and diesel cars I’ll be ready to buy, but the economic case is just not there at the moment.

Edited by Kbee on 13/03/2020 at 15:32

r pitchford    on 13 March 2020

another way to milk the car driver electric cars are having their insurance hipped up for reasons like there too quiet no one can hear them coming electric cars are well over priced and always will be they can cost upto 60%more to insure and the government will come up with other taxes as well

BrendanP    on 13 March 2020

All the grant does is to push up the price of EVs. 'How much is this car?' '£27,000 Sir' 'What about the govt grant?' 'Sorry Sir, did I say £27,000? No, it's actually £31,500, my mistake'

Car makers are going to have to persuade us to buy more of their EVs to get the overall CO2 emissions of all their sales in Europe down to 95gm/km or less, otherwise they will face huge fines. I believe they will have to slash the prices of EVs to raise sales, even if they make a loss on each car. It may still work out cheaper than paying the fines.

Whatever they lose on selling the car I'm sure they will recover it by bumping up the service costs.

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