Scottish Government Offers Interest-Free Loans for Electric Car Purchases

Scottish government offers interest-free loans for electric car purchases
Scottish government offers interest-free loans for electric car purchases

In what is certainly a first in the world of electric vehicles, the Scottish government announced plans today to offer interest-free loans for those looking to acquire electric cars. We have seen rebates, financial incentives and preferential treatment but never before have we seen the introduction of interest-free loans up to a maximum £50,000. Indeed the figure is increased to £100,000 for businesses looking to increase their exposure to the electric car market - but is this real or just smoke and mirrors?

Cost savings

There is no doubt that the Energy Saving Trust believes there is great potential in encouraging the take-up of electric vehicles, quoting a cost of 3p per mile for electric cars against 15p for petrol vehicles. The benefits to the environment are also there for all to see, and while there is some debate about the potential pollution created by electric power stations, nobody doubts there are significant benefits. The move by the Scottish government is certainly a brave one but who will be able to apply?

Small print

While the Scottish government has released its electric car policy in a blaze of glory, we are yet to see the small print. Can we really compare the situations of someone earning in excess of £100,000 per annum against somebody currently out of work - would they both be able to apply for a £50,000 interest-free loan to buy an electric car?

It may seem as though we are criticising the Scottish authorities but the fact remains that interest-free loans to acquire electric cars seem a little above and beyond what is required. There may be a sign of things to come when you read that the initial fund value for the scheme is just £2.5 million and all applications must be received by the end of March 2016. Even if we work on an average price of £25,000 per vehicle that equates to a minute number of cars, i.e. 100.

Further incentives available

However, when you also bear in mind that those acquiring electric cars in Scotland, using the government interest-free loan scheme, will also be eligible for the UK government’s financial incentives, this may well turn the head of some people. You could argue that even if this scheme was to encourage greater publicity of the electric car market, even if there is minimal funding available would still be worthwhile?

Investment in infrastructure

In hindsight, perhaps the UK government and the Scottish government might be better advised to invest in electric car charging networks in the short to medium term as opposed to encouraging the purchase of vehicles with limited charging facilities. It is all good and well announcing funding for new electric vehicles but the fact is that in the minds of many people the main issue is still the relatively small number of charging stations.

Indeed, it is also worth noting that even areas of Scotland which have charging facilities are currently experiencing minimal use with local authorities reluctant for some reason to publicise their existence. Focusing upon charging networks, promoting those which are there already, and offering limited financial incentives to make the switch from petrol/diesel vehicles to electric cars would seem more sensible?