Grants for new electric cars reduced by £500

The maximum grant for motorists who make the switch to an electric car will be reduced by £500 to £3,000 from Thursday.

Some £403 million of Government funding will extend the grant to 2022/23.

Steve Gooding, director of motoring research charity the RAC Foundation, acknowledged that the grant could not be “extravagantly generous” but warned that it 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 Department for Transport said in a statement: “As the uptake of zero-emission cars increases, a small reduction to the grant, as well as excluding cars costing £50,000 or more, will allow more drivers to benefit from making the switch for longer.”

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.

Mr Sunak also announced that the Government will invest £500 million over the next five years to support the roll-out of new rapid charging hubs for electric cars, so drivers are never more than 30 miles away from a rapid charging station.

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.

But industry experts have warned demand for electric cars will be restricted unless there are significant improvements to the charging infrastructure.

Last month, the Government outlined plans to bring forward a ban on sales of new petrol, diesel and hybrid cars and vans by five years to 2035.