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UK government pulls the plug on EV grant scheme, while forecourt fuel prices continue to rise

22/6/2022

EV charging Photo: Shutterstock
Battery and hybrid EVs now make up more than half of all new cars sold in the UK and fully electric car sales have risen by 70% in the last year, now representing one-in-six new cars joining UK roads

Photo: Shutterstock

The UK government is closing the plug-in car grant scheme as it moves attention to improving the country’s electric vehicle (EV) charging infrastructure.

Having helped kickstart the UK’s EV market and supporting the sale of nearly half a million electric cars, funding will now concentrate on expanding the public chargepoint network as well as electric taxis, vans, trucks, motorcycles and wheelchair accessible vehicles.

 

The scheme has created a mature market for ultra-low emission vehicles, helping to increase the sales of fully electric cars from less than 1,000 in 2011 to almost 100,000 in the first five months of 2022 alone, reports the government.

 

Battery and hybrid EVs now make up more than half of all new cars sold in the UK and fully electric car sales have risen by 70% in the last year, now representing one-in-six new cars joining UK roads.

 

‘Significant savings in running costs for electric cars compared to petrol or diesel equivalents can often exceed the current £1,500 value of the grant, and electric car drivers will continue to benefit from generous incentives including zero road tax and favourable company car tax rates, which can save drivers over £2,000 a year,’ claims the government.

 

A new public evaluation report published by the government highlights that while the plug-in car grant was vital in building the early market for electric vehicles, it has since been having less of an effect on demand, with other existing price incentives such as company car tax, continuing to have an important impact. The report also found the plug-in van market will benefit from grant incentives more to support businesses and their fleets in making the switch.

 

While benefitting from significantly lower running and refuelling costs – as low as 2 pence per mile, EV drivers can also expect to see a surge in cheaper, more reliable and quicker public chargepoints, as the government delivers its commitment to install 10 times more on-street chargers by 2030, suggests the study.

 

Soaring UK forecourt prices
Meanwhile, UK petrol and diesel prices have been hitting new record highs over the past month, according to the RAC, with the average cost of filling the tank of a 55-litre family car passing £100 for the first time in early June.

 

RAC research shows that as many as eight-in-10 people depend on their cars. Commenting on the rocketing prices, the motoring organisation’s fuel spokesperson Simon Williams notes: ‘Many must be wondering if any further financial support from the government will be forthcoming. March’s 5 pence fuel duty cut now looks paltry as wholesale petrol costs have already increased by five-times that amount since the Spring Statement (25 pence). A further duty cut or a temporary reduction in VAT would go a long way towards helping drivers, especially those on lower incomes who have no choice other than to drive.’

 

He continues: ‘It’s also important to remember that the government is still benefitting from the high fuel prices by taking around 30 pence in VAT from every litre sold. This compares to just 25 pence before Russia invaded Ukraine. On top of this the government is still collecting 53 pence fuel duty from every litre.’

 

In response to the record fuel prices, UK Secretary of State for Business, Energy and Industrial Strategy Kwasi Kwarteng has asked the Competition and Markets Authority (CMA) to conduct a swift high-level review of competition in the UK fuel retail market.

 

Commenting on this development, Gordon Balmer, Executive Director of the Petrol Retailers Association (PRA), says: ‘By law the 5 pence/litre fuel duty cut has to be passed on – and it has been. Petrol retailers have been unfairly scapegoated for rises in the wholesale price of fuel over which they have no control. We welcome the Competition and Markets Authority investigation, as it will confirm not only that the 5 pence/litre fuel duty cut has been passed on, but that competition between forecourts remains vigorous and that our members are operating on razor-thin margins. If the government wants to ease the burden of pump prices on motorists, they should cut fuel duty by a much more substantial margin, just as many other governments of European countries have done.’

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