Strategy

Electric vehicles - the transition

Senior Strategist Nicky gives us her verdict on the recent government announcement to cut EV grants.

This week's announcement that the Government would further reduce the electric car grant for EV's costing over £35,000 got me thinking. Where are the real financial incentives for buying a more environmentally friendly vehicle? The upfront cost is too high - especially when countries such as the Netherlands subsidise EV leases heavily. So, I asked Nicky Lloyd, our Senior Strategist, for her expert opinion.

Let's see what Nicky thinks...

Nicky: "The SMMT reports that new car sales across private, fleet and business vehicles were down 35.5% in February, the weakest February since 1959. Plug-in vehicles continued to enjoy growth, with BEVs and PHEVs taking a combined 13% market share for the month, up from just 5.7% in February 2020. However, according to the SMMT, uptake of these new technologies to the levels required by 2030 remains a mammoth task." 

Tesla's stock grew by 695% in 2020.

"The Government's recent announcement that immediate cuts to EV grants would be in place and reduce price eligibility seem to be in direct conflict with the ban on the sale of new ICE vehicles by 2030."

"The move limits the number of models eligible for the new incentive amount with only vehicles priced below £35,000 qualifying. It also reduced the amount that consumers can claim towards the cost of a new EV by £5000 to £2,500. These cuts could hamper the adoption of the emerging EV Car, Van and Truck markets, increasing the cost of an electric vehicle at a point when vehicle sales in the UK have been highly affected by COVID-19 lockdowns. The new ceiling puts some of the more environmentally models with longer mile ranges out of grasp.

This is especially true for consumers looking to benefit from grants purposed for standard models with lower battery capacity. Take, for example, the Nissan Leaf e+ version, which no longer qualifies. It also means that there will potentially be less EV's in the second hand market in 3-4 years, which will have a further impact on pollution levels." 

Well, I hope Nicky's knowledge sheds some light on the governmental move. I think it seems a pity and even counterintuitive to restrict grants when considering the goal to ban all new petrol diesel vehicle sales by 2030! 

What are your thoughts? We would be interested to know your opinion or insights in this space. 

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