LONDON (Reuters) – The UK government will commit £43 million ($66.73 million) over 18 months to subsidize the uptake of electric cars, the department for transport said.
British motorists will receive up to £5,000 towards the purchase of a low-carbon car from January 2011 to March 2012, Transport Secretary Philip Hammond said.
The amount committed on Wednesday is less than the £250 million pledged by the previous Labour government over a five-year period.
However, a transport department press officer denied that the new government had cut the number of cars it could subsidize.
"There is no reduction in funding for the first 18 months, but after that it will be reviewed," the press officer said.
"It's a £5,000 incentive but it is up to 25 percent of the value of the car. The amount awarded could be less than £5,000 if cars come to market cheaper so the money will go further," the press officer added.
The transport secretary said the government will review the level of funding regularly to ensure Britain remains competitive and taxpayers get value for money.
"The first review will be in January 2012, at which point we will set the level for subsequent years," he said in a statement.
In its review, the government will consider whether the cost of vehicles has come down to determine whether a new subsidy level should be set.
Renault, which plans to launch a four-model Z.E. (Zero Emission) family of electric cars in the next few years, welcomed the UK subsidies.
The first of its full-electric vehicles will be a Kangoo car-derived van launching in mid-2011. In 2012, it will be joined by the Fluence four-door sedan, then a city vehicle based on the two-seater Twizy concept and a five-door minicar.
Renault UK Managing Director Thierry Sybord said with the financial incentive in place, the carmaker "is even more excited about encouraging as many people as possible to consider using electric vehicles to drive down vehicle emissions."
Paul McVeigh contributed to this report