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Government £5000 EV subsidy protected from spending cuts

Date: 28 July 2010

Nissan Leaf

The £5000 incentive to encourage drivers into electric vehicles will be maintained by the new coalition Government, the Treasury has confirmed today. The subsidy has only been confirmed until March 2012, with regular reviews planned from the beginning of 2012 to decide on future levels, depending on take-up. The performance and safety criteria for exactly which vehicles are eligible will be published "shortly", according to the Department for Transport, with uncertainty surrounding plug-in hybrids such as the Vauxhall Ampera and Toyota Prius.

The sweeping cuts across public spending had threatened the initiative announced by the outgoing Labour Government earlier this year, politicians have moved to confirm the £43m subsidy's future, enough for the first 8600 electric cars. The scheme had expected to be confirmed or canned in October's budget review announcement, but under reported pressure from car manufacturers worried about the effect the uncertainty could be having on the appeal of electric vehicles, the confirmation has come early. Nissan's Leaf, the first mass-appeal EV, will costs £23,350 with the subsidy, putting it within the reach of lower medium models on whole-life cost once the reduced fuelling and servicing costs are factored in.

"The Government remains committed to reducing the UK's budget deficit, but understands the need for certainty for investors who are taking long term decisions now on where to launch ultra low carbon vehicles and where to locate future production," read the Department for Transport statement.

From January 2011, buyers of electric vehicles will get a payment of 25% of the vehicle's value, up to a £5000 limit., with the scheme running for 12 months before a review planned for January 2012 where the subsidy level for subsequent years will be set.

"We are sending a clear signal that Britain is open for business and that we are committed to greening our economy. This will ensure that the UK is a world leader in low emission vehicles," said transport secretary Phillip Hammond. "We will review the level of the incentive regularly to ensure that the UK remains competitive and taxpayers get value for money."

Nissan has prioritised the UK market for the Leaf, partly on the back of Government assurances on charging infrastructure and financial support for buyers.

"Electric and low carbon cars are fun to drive and essential to meet our climate targets. That's why we'll need a massive increase in the number of electric and clean green cars on our roads," said energy and climate change secretary Chris Huhne. "Because this is new technology the Government needs to step in to kick start the market which is why today's initiative is vital."

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