Budget sees grants for new electric cars reduced by £500

Grants for new electric cars have been cut in chancellor Rishi Sunak’s budget.

Steve Gooding, director of motoring research charity the RAC Foundation, warned that this risks failing to “tip the balance” for undecided buyers if it falls quicker than the retail price of electric cars. He said: “This is still a fragile market and ultimately the advertised benefits of cheaper fuel and other running costs mean nothing to drivers if the up-front cost of the vehicle is too high in the first place, compared to the petrol or diesel equivalent.”

The maximum grant for motorists who make the switch to an electric car will be reduced by £500 to £3,000 from Thursday. Some £403m of government funding will extend the grant to 2022/23.

The plug-in car grant has been in place since 2011 to support the uptake of ultra-low emission vehicles. It was originally set at £5,000 for all eligible ultra-low emission cars, but in 2018 it was cut to £3,500 and hybrids were excluded.

Figures published by the Society of Motor Manufacturers and Traders shows 38,000 pure electric new cars were bought in 2019, more than double the total in the previous year. These cars now hold a 1.6% share of the new car market.