UK brings back EV grants

LONDON: The UK is reintroducing grants of as much as £3,750 (US$5,000) to support electric vehicle purchases, as the Labour government seeks to bolster its beleaguered car industry and meet net zero goals.

The £650 million program is intended to speed the switch to emission-free vehicles, the Department for Transport said in a statement.

The full incentive is available only for new vehicles costing less than £37,000, with more than 30 models currently available under that threshold.

"This EV grant will not only allow people to keep more of their hard-earned money," Transport Secretary Heidi Alexander said.

"It'll help our automotive sector seize one of the biggest opportunities of the 21st century."

Direct grants for EV purchases were eliminated by the previous Conservative government in 2022.

Since, then adoption of purely battery-powered cars has fallen short of targets - not just in the UK, but across other parts of Europe, as buyers stick with combustion-engine models or opt for hybrids.

The UK's auto industry had lobbied for the reinstatement of subsidies as private EV demand trailed business and fleet sales that still qualified for some tax incentives.

Labour's move will widen the demand base for EVs by boosting retail sales, though it could hurt resale values, according to Toby Poston, chief executive officer of the British Vehicle Rental & Leasing Association.

"Bit by bit, the government is chipping away at the barriers to EV adoption," Poston said.

UK EV sales have gotten a boost in recent months from discounts as manufacturers seek to meet the government's targets under a mandate system that can result in fines if they fall short.

Registrations of battery-electric vehicles jumped 35% in the first half of the year, making up 22% of the UK's new-car market - short of the government's 28% target.

The government has moved to phase out sales of new cars powered entirely by combustion engines from 2030.

In contrast to the UK, the European Union last year introduced tariffs on all Chinese-made EVs - hitting not only brands like BYD and MG whose manufacturers are based in China, but also Citroën, BMW, Audi and Tesla models.

In the EU, sales of battery-electric vehicles rose 26% in the first five months of this year, according to the European Automobile Manufacturers' Association.