UK government cuts EV incentives and lowers threshold for electric vehicles

The subsidy for electric vehicles in the UK has been slashed by £1000, and the number of eligible vehicles has also been reduced

In an era where electric vehicle transportation is being subsidised to encourage faster adoption of this cleaner technology, the UK has taken a backward step by cutting incentives for EV owners.

The Plug-in Car Grant (PICG) has just been reduced from £2500 to £1500 per vehicle while the maximum recommended retail price of vehicles eligible for the grant has been reduced from £35,000 to £32,000.

The reason for the change is to allow the incentives to spread to the largest number of EV owners as possible, as record sales continue for electric vehicles in the UK.

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According to Autocar, 162,000 full battery-electric cars have been sold year-to-date in 2021 in the UK, which is an increase of 88.9 percent compared to the same period last year. EVs now account for 10.6 percent of all cars sold in the UK.

While some have supported the move, others have criticised the incentive drop as a blow to consumers who are looking to make the switch from an internal-combustion-engined vehicle to an electric one.

How does Australia compare to the UK in terms of EV sales?

Australia has been one of the slowest developed countries to adopt electric vehicles and make them a more prominent part of the transport industry, though numbers are growing.

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In the first half of 2021, 8688 electric vehicles were sold, making up 1.57 percent of the market, which is a promising increase from the 0.78 percent share in 2020.

The Tesla Model 3 has been the most popular EV in Australia, closely followed by the affordable MG ZS EV.

What are the incentives in Australia?

Australia has been slow to introduce incentives for electric cars, and some states such as Queensland still don’t offer incentives to purchase an electric vehicle.

South Australia recently offered subsidies for the first 7000 electric vehicles in the state, with $3000 taken off the purchase price of a vehicle as well as a three-year, registration-free period.

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New South Wales announced in June this year that it would subsidise the first 25,000 EVs purchased in the state with a $3000 rebate, however the catch is that the car must fall below a $68,750 price point.

Victoria has adopted a similar situation, offering an initial 4000 incentives valued at $3000 each. Victoria has said it will release a total of 20,000 subsidies for eligible vehicles purchased on or after 2 May 2021.

As somewhat of a backwards step for the industry, Victoria taxes each EV driver 2.5 cents for every kilometre driven.

Queensland looks to be one of the last states to introduce incentives for EVs – having yet to decide whether incentives will even be made available to encourage electric-vehicle ownership.