UK considers the return of EV purchase subsidies

  • As originally revealed by the Financial Times, the UK government is currently considering the reintroduction of an EV subsidy scheme for the private purchase sector, which could take the form of the government underwriting EV loans to help lower or eliminate interest rates on them.
  • Whilst all car manufacturers managed to meet the 2024 BEV sales target, such an incentive scheme would be just what the industry has been calling for over the past few months.
  • The news also comes just the week after the neighbouring European Union also announced its intentions to consider a bloc-wide purchase incentive scheme.

UK government considers underwriting consumer EV loans to reduce costs

With the UK government reportedly now in discussions with the UK’s car finance industry regarding the plans, such a move would be a change in policy for the United Kingdom, which ended its previous plug-in car grant program in June 2022. At its inception, that scheme paid out up to £5,000 off the price of a new eligible electric car, but at the time of its ending, that subsidy had been reduced to up to £1,500. The government is reportedly not considering bringing this cash subsidy back, as this would cost more to the treasury. Besides, approximately 90% of new consumer car sales in the UK are purchased on finance agreements, meaning this proposed subsidy would cover the vast majority of private EV sales.

While the UK already exists as the biggest electric car market in Europe, by units sold, the hope with such a policy would be to boost fully-electric sales in the country further. For the end of 2025, all manufacturers will need 28% of their car sales to be zero-emission to comply with the mandate. The government also recently opened a consultation in bringing forward the ban on new petrol and diesel cars from 2035 to 2030, which would complement this new loan underwriting proposal.

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As mentioned earlier, the European Union is also considering the introduction of a bloc-wide purchase incentive scheme, which comes after may member states discontinued their own subsidy schemes in previous years. Whether the EU’s planned scheme could take a similar loan format to the UK’s proposal remains to be seen, however.

With this proposal, and the government’s recent announcement of a £65 million investment to on-street charging specialists Connected Kerb, the democratisation and accessibility of EV ownership is looking bright in the country.

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