The UK government has slashed grants for electric car buyers, to the dismay of the automotive industry as it tries to shift away from petrol/ diesel fuels.

The maximum grant for electric cars has been reduced to £2,500 from £3,000 with immediate effect on Thursday 18.03.21. The government has also lowered the price cap for cars eligible for the subsidy from £50,000 to £35,000.

The cut is likely to be contentious, only a few weeks after the chancellor, Rishi Sunak, extended a subsidy for petrol and diesel car drivers by freezing fuel duty.

In general, electric cars cost more than those with petrol/ diesel engines but are seen as a critical part of meeting the UK’s decarbonisation goals.

The UK government said it wanted to target help at people less able to afford electric cars, rather than wealthier buyers of premium vehicles.

Essentially, this means the government has increased the cost of an electric car, which produces zero carbon dioxide exhaust emissions, at the same time as keeping down the costs of burning petrol and diesel – slightly contradictory.

The transport minister Rachel Maclean said the government wanted “as many people as possible to be able to switch to electric vehicles”, but flagged rising costs. “While the level of funding remains as high as ever, given soaring demand, we are refocusing our vehicle grants on the more affordable zero-emission vehicles, where most consumers will be looking and where taxpayers’ money will make more of a difference,” she said.

The car industry criticised this initiative, as the government has cut the support for electric cars by £1,000 in just over a year. In the March 2020 budget they cut the grant from £3,500 to £3,000 and introduced the £50,000 eligibility cap. When the support was first introduced in 2011, it was worth up to £4,500 per car.

Leasing an electric car will still be cheaper than buying outright or through PCP (Personal Contract Purchase) finance, however drivers may see a slight increase on the monthly charge for vehicles above the threshold stated above.

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