Government scraps UK plug-in car grant

In the 11 years since the PiCG (plug-in car grant) first came in to help kickstart the sale of electric cars, Whitehall has provided £1.4 billion to car buyers and seen electric car sales go from 1,000 in 2011 to 100,000 in the first five months of 2022.

The grant has been slowly winding down for a while, however. It originally gave £2,500 off electric and plug-in hybrid cars costing up to £35,000. That was pegged back to £1,500 on battery-electric cars only, costing up to £32,000. Now it is running on empty, with the government saying the funds can be better spent in other ways.

While it maintains the PiCG was always a temporary measure, its demise yesterday has surprised many in the industry. Volkswagen UK’s financial arm said it was a “hugely disappointing” move that would “heavily disincentivise EV adoption across the UK”.

Mike Hawes of the SMMT said scrapping the grant sent the wrong message to motorists and came at the worst time for the industry.

“We are now the only major European market to have zero upfront purchase incentives for EV car buyers yet the most ambitious plans for uptake,” he said.

In 11 years, the PiCG supported the sale of nearly half a million electric cars. Battery and hybrid electric vehicles (EVs) now make up more than half of all new cars sold. Fully electric cars represent one in every six new cars, with many more of them – 24 compared to 15 a year ago – costing less than £32,000 to buy.

Other government incentives to switch to electric cars remain, with zero VED (road tax) and lower tax rates for company car drivers.

The government says £300m in grant funding will be spent instead on purchase incentives for plug-in taxis, motorcycles, vans, trucks and wheelchair-accessible vehicles.