Government Grants for Electric Cars

Political Football
Political Football

Government grants for electric cars will be available from 1 January 2011 in a groundbreaking move by the UK government, which is set to push the UK to the forefront of the electric car market. This is an initiative which was originally introduced by the Labour government, although thankfully the coalition authorities have agreed to ring fence funding for this particular issue which will be around £43 million. So what can we expect from the government grants for electric cars initiative and what does it mean to people on the ground?

Electric cars in the UK

There is no doubt that electric cars in the UK continue to grow in number, with the UK authorities determined to attract a number of leading overseas car manufacturers to the UK with attractive tax breaks. We have seen a number of agreements reached with the likes of Nissan and other leading car companies which have effectively given these companies a relatively cost-effective route into mainland Europe. However, there have been concerns regarding the cost of electric cars and the ability for everyday users to recharge their batteries.

The Government Grants for Electric Cars initiative

In simple terms the government's initiative will allow buyers to claim a 25% discount on the purchase of new electric cars up to a maximum discount value of £5000. So far nine electric cars have been highlighted by the authorities as being eligible for the discount scheme although only three of these cars will be immediately available to the marketplace.

The cars in question are :

Mitsubishi i-MiEV Smart fortwo electric drive Peugeot iOn Nissan Leaf Tata Vista Toyota Prius Plug-in Hybrid Vauxhall Ampera Citroen CZero Chevrolet Volt

The first three cars on the list will be available for purchase immediately while the others will be introduced to the market over the next couple of years. When you take into account the fact that the Mitsubishi i-MiEV costs around £29,000 before any discount this is a perfect example of the need to invest heavily for long-term efficiency.

To buy or to lease?

One of the more confusing aspects of the governments grant scheme is the fact that a number of the nine cars chosen so far will only be available for lease rather than outright purchase. However, the UK government has also confirmed that where the cars in question can only be leased rather than bought outright the 25% discount will also apply to monthly leasing costs. This will take away a significant portion of the required investment on behalf of consumers to acquire what are by far and away the most efficient and cost-effective motor vehicles on UK roads today.

Will leasing kill the electric car?

The very fact that some of these vehicles will only be available for leasing will cast many minds back to the early days of the electric car amid accusations that General Motors killed the electric car in the U.S. when the highly successful EV1 electric vehicle was abruptly taken off the road and all leased vehicles taken back in-house. While it is unlikely that the electric car industry will suffer such a fate in the UK, due to improved technology and environmental awareness, some people will remember the problems posed by the leasing of electric vehicles by General Motors.

Power points in the UK

One of the main issues with regards to electric vehicles in the UK, and in fact around the world, has been the access to electric power points from which electric car batteries can be recharged. Despite the fact that car companies have invested billions upon billions of dollars into electric cars, and their respective technology, very little has gone into the way of power supply systems in the UK. However, it now looks as the UK government has partially solved this problem, which will ultimately give more and more people access to electric car charge points across the UK.

Up until just a few weeks ago it was only really the London area which gave electric car users any form of reliable and sustainable access to electric car power points. Boris Johnson, the Mayor of London, has been very supportive of the electric car industry and alternative forms of transport in line with the requirement to reduce emissions into the environment.

The £43 million electric car grant scheme is also being complimented by a further £20 million which is being made available to companies looking to introduce plug-in charge points in the Midlands, Greater Manchester, East England, Scotland and Northern Ireland. Without the charge points there is very little point in pushing the UK electric car market because of restricted journey times and journey distances.

Power points of the future

The £20 million power point system takes in a number of councils and private companies throughout the UK who have put together acceptable proposals for the UK government to allow them to access the funding available. When you consider that it could cost you as little as one pence per kilometre to recharge your electric car, the potential fuel cost savings compared to petrol and diesel are enormous, not to mention the benefits for the environment.

However, there is also a need to ensure that the electricity to be made available at the charge points around the UK is produced in such a manner that it is also highly efficient and environmentally friendly. There is no point in introducing electric vehicles, to save on emissions into the environment, only for the source of the electric to replicate the damage which has been caused by UK diesel and petrol cars. It is likely that in due course power points around the UK will use naturally occurring energy such as solar and wind although in the meantime they will probably make use of some of the most highly efficient and environmentally friendly power stations and power systems in the world.

The future of electric cars in the UK

There is no doubt that electric car industry in the UK has picked up enormous speed over the last few months and even the introduction of a new government does not appear to have derailed this particular express train. However, there are still a number of issues to consider which include :

Cost of electric cars

While the £43 million grant scheme will be well received by the UK electric car industry and consumers, it will still leave consumers with the requirement to fund a potentially larger than expected outlay to acquire vehicles. When you consider that the Mitsubishi still costs in the region of £24,000 even after the 25% discount offered by the UK government, not everybody in the UK will be able to afford this kind of expenditure.

Tax incentives

While there are various incentives with regards to road tax it is highly likely that the UK government will need to introduce further tax incentives to give the electric car market major momentum going forward. Quite how this would be introduced and what form it would take remains to be seen but this is something which the UK government is already looking at.

Protecting the environment

As we touched on above, while the move towards electric powered cars will be more efficient and more environmentally friendly there is a need to ensure that the electric required to run an electric car is not produced in such a manner as to harm the harm the environment in a way which petrol and diesel cars do. This will mean the introduction of ever more efficient power stations and power systems in the UK.

The stigma attached to electric cars

In days gone by it was potentially easy to spot an electric car from 1,000,000 miles away because they stood out from the crowd quite considerably. However, the stigma attached to electric cars of the past has nearly disappeared because many electric cars available today, and planned for the future, are literally the shells of previous petrol and diesel variations with the inner workings replaced by the new power system.

Tax income lost from fuel tax

It is common knowledge that the UK government makes billions upon billions of pounds a year by taxing petrol and diesel and with electric cars set to become more and more popular in the future this particular income stream is likely to come under pressure. However, there is no way on earth that the UK government will sit back for ever and a day allowing this potential tax income to drip through their hands and at some point we will see various taxes added to the electric car market.

Environmental targets

While the UK government continues to push ahead with the Labour inspired electric car discount initiative there is no doubt that the UK also has one eye on environmental issues. A mixture of environmental targets from the EU, the higher than average price of oil and concerns about the future supply of oil have all led to an increased desire to ensure that the electric car market grows in the future.

Is this the turning point in the UK?

There is no doubt that the UK government, and the previous government, is certainly looking to introduce more environmentally friendly and more electric powered cars. However, on a note of caution, the UK government has like many others around the world previously expressed an intention to build and grow the electric car market only to fail to deliver. The truth is that the proof will be in the pudding because previous attempts to breathe life into this sector have proved to be very futile leaving many people worse off after acquiring what they thought were groundbreaking environmentally friendly, highly efficient electric cars.

There's also the problem of replacing the massive income from fuel duty which would effectively disappear overnight if all petrol and diesel vehicles in the UK were converted into electric power. So while it is highly likely that the UK authorities will look to introduce various tax incentives to both manufacturers and consumers in the UK in relation to electric cars, there will be some form of taxation in the future to make up for the ongoing loss of tax income from fuel duty.

Electric cars of the future

There is no doubt that the number of electric cars on offer in Europe, the UK and around the world continues to grow as does demand for efficient and environmentally friendly transport. The more money spent in this particular area the more incentive for car manufacturers and developers to invest for the future, which should hopefully see this sector finally come to life and become a sustainable long-term employment opportunity and viable market. The UK government has initially singled out nine electric vehicles for the 25% discount scheme although it is highly likely that more will be added in due course and the pot of £43 million will be increased if as expected this scheme is successful.

Conclusion

The UK electric car market has taken some time to take off but after initial investment in the London market it seems that electric cars are set to become more commonplace all around the UK. The more incentive for consumers to acquire electric vehicles the more incentive for manufacturers and developers to invest time and money and this should lead to ever increasing sales and more demand for such vehicles. As demand for electric cars in the UK grows we will see the cost of electric vehicles fall due to competition issues and efficiency/technology cost savings.

Often overlooked, the subject of power supply for electric vehicles is something which is now finally being addressed and thankfully the UK government has put aside a further £20 million to help development in this area and the introduction of electric power points around the UK. While there is certainly much more work to be done there is no doubt that the incentive scheme announced by the UK government will certainly catch the attention of consumers and electric car manufacturers. We are now entering a very important period for the UK electric car market one which the UK government needs to manage and nurture for the future.