TAKEN FOR GRANTED: Government’s £650 electric infrastructure package announced

On the 14th July, the UK Government announced a new incentive to support the uptake of electric vehicles (BEVs).

The £650 million package will run until the 2028/2029 financial year and is another episode in the grant based encouragement to go electric.

However, the closure date will remain under review.

The electric car grant has a chequered history, being first introduced as the PiCG (Plug in Car Grant) in 2011 offering support of up to £5,000 for qualifying vehicles.

This included full electric vehicles and plug-in hybrids with an acceptable range on electric-only power.

The grant was progressively reduced between then and 2020, until its removal in March 2021.

Now the reintroduction of the weighty £650 million package hopes to accelerate uptake of BEVs.

The new incentive will apply to cars priced under £37,000 with a maximum allowance of £3,750 discounted at point of sale.

The Electric Car Grant has two bands. £3,750 will be given for the most sustainably produced cars and £1,500 for cars that meet some environmental criteria.

This, according to the government is in recognition of the need to address embedded carbon emissions across a vehicle’s lifetime, as well as tailpipe emissions.

Vehicles that do not meet minimum sustainability standards will not be eligible for a grant.

This announcement is the headline of a raft of measures designed to drive BEV uptake forward.

The restricted market for electric cars has also  been recognised, as the cheapest electricity can only be obtained on home charging.

The problem is that just over one third of homes in Britain do not have off road parking and therefore no access to discounted home charging, resulting in no incentive to commit to BEVs.

Attempting to address this, the government has also announced a wider package of measures to support the continued deployment of charging infrastructure.

These include £25 million of funding to deliver cross-pavement charging channels, £30 million grant funding to install charge points at depots for vans, coaches and HGVs, supporting the transition of the road freight and coach sectors.

And also £8 million of funding to install chargers at NHS sites in England and changes to allow EV hubs to be signed from major roads.

While helping the potential buyer, the incentive will also help the manufacturers to increase sales and meet their ZEV mandate targets for this year.

This is a requirement that 28% of new car sales in 2025 and 16% of vans must be zero emissions.

However, the updated mandate allows some flexibility for manufacturers to manipulate within the guidelines.

Small volume manufacturers such as McLaren and Aston Martin are exempt.

But there are concerns if the incentives adequately address the problem. Commenting on the grant introduction, Adam Kemp,  Director of Partnerships at ‘ DriveElectric” said, “We understand the government’s decision to support certain carmakers as they transition their ranges to fully electric. We don’t see this announcement having a significant impact on EV adoption, especially with Benefit-in-Kind rates for hybrids set to increase by 2028.

“There is also the additional Vehicle Excise Duty (VED) of £425 annually for five years on vehicles with a list price exceeding £40,000. Initially targeting high-end luxury cars, this surcharge was extended to include electric vehicles registered from 1st April this year”.

Chris Masson, Editorial Director of ‘The Car Expert’, also expressed reservations about the grant scheme. “The Government’s new £650 million Electric Car Grant looks good in a headline, but in reality, it feels like another policy designed to help car manufacturers far more than ordinary drivers.

“At a time when an overwhelming majority of households buy used cars rather than new, focusing £650 million entirely on new vehicle sales seems short-sighted. There’s nothing here for used EV buyers – no support for those looking to switch from older, higher-polluting petrol and diesel cars to more affordable second-hand electric vehicles. If cutting emissions is the goal, wouldn’t helping these drivers make the most difference?

“There’s also the question of whether this money will genuinely lower prices. History suggests otherwise. As seen with past EV grants, solar panel incentives and even stamp duty cuts, manufacturers and dealers often adjust prices upwards when grants are available – reducing or even eliminating the benefit for consumers. This, therefore, risks becoming just another subsidy absorbed into the industry’s bottom line.”

While the grant may provide an incentive for many purchasing BEVs, they will also have to consider the additional tax requirements on electric vehicles, and the fact that to ensure the maximum grant, the choice of vehicles will be limited to those in that sector.