Government rules out return of grants for electric cars | Autocar

He was echoed by SMMT CEO Mike Hawes, who said the "government has been keen to assure the UK automotive industry's competitiveness" but "there is little to help consumer demand".

Hawes suggested that reducing VAT on new EVs and adjusting taxation rates would also have been welcome measures.

More recently, Volkswagen Group UK managing director Alex Smith said grants would be an "eminently sensible" means of signalling "that this is the direction of travel".

Smith added: "We would be absolutely in favour of well-targeted, specific and realistic incentives to signal that decarbonisation of road transportation is the aim and that battery-electric vehicles are a very, very significant tool in achieving that."

And in the Electric Vehicles report, the Environment and Climate Change Committee suggests "the government should explore targeted grants to incentivise the purchase of EVs with a view of facilitating a list price under an appropriate threshold".

It says this would "stimulate the affordable market", while facilitating a shift towards EVs achieving price parity with combustion cars and "help counteract the trend towards SUVs which have broader environmental costs".

The committee said there should still be "an exit strategy" in place for the grant's eventual withdrawal, but this should only be considered once price parity is achieved.

In response, the government said: "Government grants have been in place for over a decade to help reduce the up-front purchase price of new EVs. All government grants are kept under review to ensure the best value for money for the taxpayer. The plug-in car grant was closed to new orders on 14 June 2022, having injected £1.5 billion in taxpayer funding to support the growth of the early electric car market.

"In June 2022, the government published a public evaluation report, which highlighted that the plug-in car grant was vital in building the early market for electric vehicles. It then had less of an effect on demand than other existing price incentives, such as company car tax. In 2023, battery-electric vehicles represented 16.5% of new car sales in the UK.

"The price gap for new cars has continued to decrease over the past few years. According to industry data, the purchase price premium of an EV - relative to an equivalent internal combustion engine vehicle - has dropped from around 50% in 2020 to around 40% in 2023. With battery costs reducing and continued innovation, some external forecasts predict that some EVs could be around the same price to purchase as a petrol or diesel car by the end of the 2020s.