The UK Government has announced cuts to its plug-in vehicle grant scheme.

From today, the level of grant support available with the purchase of a new electric car has been reduced from £2,500 to £1,500, while the maximum price of cars to which the grant can be applied has also been dropped, from £35,000 to £32,000. Wheelchair-accessible vehicles are unaffected by the change.

The grants available for electric vans have also been reduced, from £8,000 to £5,000 for large vans, and from £3,000 to £2,500 for small vans, with a new limit also being introduced of 1,000 grants per customer per year.

It is the second time this year the grants have been reduced, having been set at their previous level in March.

Commenting on the changes, Transport Minister Trudy Harrison said: “The market is charging ahead in the switch to electric vehicles. This, together with the increasing choice of new vehicles and growing demand from customers, means that we are refocusing our vehicle grants on the more affordable vehicles and reducing grant rates to allow more people to benefit, and enable taxpayers’ money to go further.

“We want as many people as possible to be able to make the switch to an electric vehicle, which is why we will also be introducing new rules to make it easier to find and pay at charge points. 

“This will ensure drivers have confidence in our charging infrastructure, as we look to reduce our carbon emissions, create green jobs and level up right across the UK.”

Reacting to the announcement, Society of Motor Manufacturers and Traders chief executive Mike Hawes said: “Slashing the grants for electric vehicles once again is a blow to customers looking to make the switch and couldn’t come at a worse time, with inflation at a ten-year high and pandemic-related economic uncertainty looming large.

“Industry and government ambition for decarbonised road transport is high, and manufacturers are delivering ever more products with ever better performance. But we need to move the market even faster – from one in a hundred cars on the road being electric, to potentially one in three in just eight years – which means we should be doubling down on incentives. 

“Other global markets are already doing so whereas we are cutting, expecting the industry to subsidise the transition, and putting up prices for customers. UK drivers risk being left behind on the transition to zero-emission motoring.”

Giving his reaction, BVRLA chief executive Gerry Keaney said: “Financial incentives such as the plug-in grants have proven to be a positive factor in encouraging people into electric vehicles, evidenced by the continued growth we’re seeing. Subsidies cannot run forever, but the fleet sector relies on certainty, reducing these grants will have a negative impact on this.

“While we’ve seen high levels of uptake within the car market, the situation is not the same for electric vans. The disparity across the industry means that sweeping solutions are not suitable.

“Incentives have had a positive impact to date but there is more to be done. It is disappointing to see support declining when cost remains a crucial stumbling block.”

Jon Lawes, managing director of leasing company Hitachi Capital Vehicle Solutions, said: “Last minute cuts to both the grants for cars and vans are counter intuitive to achieving the ambitious targets set by the government to reduce carbon emissions and has the potential to dampen the strong demand for zero-emission vehicles we’ve seen in recent months.

“Despite the growth of EV registrations, this market remains in its infancy and TCO, especially across LCVs, can be challenging for fleet operators who need to adopt.

“The government rationale to reducing eligibility at this juncture for the second time this year is confusing, as we know financial incentives to encourage EV adoption are an important factor within the vehicle renewal decision making process.”

Richard Jones, managing director of Lloyds Banking Group’s Lex Autolease and Black Horse, said: “As the uptake in electric vehicles continues to accelerate the UK’s journey to net zero, we understand that policymakers will need to continuously review the grants available. 

“However, the announcement made today to reduce grants [eligibility] from £35,000 to £32,000 will impact around 60% of the vehicles available in the market increasing rentals on new orders on a 36-month agreement by around £70 a month overnight. 

“We hope that government departments and industry bodies continue to work together to maximise the opportunities to encourage EV uptake and reassure manufacturers that the UK is leading the EV charge.”