The UK wants to be the first major auto market in Europe to end sales of internal combustion engines, starting in 2030, but it’s been far more reluctant than its key European neighbors to help fund acceptance of electric alternatives.
The British government on Thursday further angered automakers by abruptly announcing it was cutting EV purchase incentives by 500 pounds ($647), to 2,500 pounds, and was lowering the price ceiling for incentives to 35,000 pounds from 50,000 pounds, including VAT.
That new ceiling now excludes previously eligible electric cars such as the Tesla Model 3, Ford Mustang Mach E, Volkswagen ID4 and Lexus UX300e. It also affects long-range versions of less-expensive models such as the VW ID3 and Skoda Enyaq.
Purchase incentives for plug-in hybrids were halted in 2018.
The UK incentive is now equivalent to about 3,000 euros, while the ceiling price is close to 41,000 euros. Those figures are considerably less than the four other big European markets, according to the automakers' lobbying group ACEA.
How those countries incentivize EV purchases:
- Germany: 9,000 euros for EVs and 6,750 euros for plug-in hybrids with a list price of less than 40,000 euros. For vehicles over 40,000 euros, the incentive falls to 7,500 euros for EVs and 5,625 euros for plug-in hybrids. Incentives will be reviewed in December this year.
- France: 7,000 euros for EVs if buying privately, 5,000 euros for companies, for vehicles costing below 45,000 euros. Incentives fall to 3,000 euros for both private buyers and companies for cars costing between 45,000 and 60,000 euros. Plug-in hybrids emitting less than 50 g/km of CO2 are eligible for 2,000 euros off. The maximum EV purchase incentive falls to 6,000 euros on June 30, with PHEVs down to 1,000 euros. There are also income-dependent scrapping incentives.
- Spain: Up to 5,000 euros for EVs and 2,600 euros for PHEVs for private buyers for cars costing up to 45,000 euros.
- Italy: 4,000 euros for EVs, and 1,500 euros for PHEVs emitting less than 60g/km of CO2 and costing less than 50,000 euros (excluding VAT). That rises to 8,000 euros for EVs and 4,500 euros for PHEVs if the customer scraps an old vehicle.
Tension between automakers and the government was already high due to difficulties surrounding the UK's exit from the EU on Jan. 1 and the announcement last year that it would ban the sales of cars with internal combustion engines starting in 2030, with certain hybrids allowed until 2035.
Last year the auto sector lobbying association SMMT urged the government to delay the ban until 2040 in a consultation document seen by Automotive News Europe. It also called on the government to remove the 20 percent VAT to make EVs "effectively tax free."
Nonetheless, the government pressed ahead with the 2030 ban and now, in a move that seems to fly in the face of its intention to move more people into electric cars, has cut EV incentives. "The decision to slash the plug-in car grant is the wrong move at the wrong time," SMMT CEO Mike Hawes said. "This sends the wrong message to the consumer, especially private customers."