Tesla and Ford Among Those Affected
In recent years, the British government has pushed to increase the number of EVs. Customers have been offered subsidies of 35% of the buying price of certain EVs, with a maximum set at £3,000 ($4,181).
However, the increase in demand has weighed on this program, forcing the government to lower the highest grant available to £2,500 ($3,484), as well as the upper limit of eligible cars from £50,000 ($69,683) to £35,000 ($48,778).
As a result, the Tesla Model 3, the best-selling EV in the UK in the last 12 months, is now ineligible for the grant because of its price tag starting from £40,500 ($56,443). The upcoming Ford Mustang Mach-E will also not be covered by the grant.
Some British lawmakers complained that taxpayers “should not be subsidising people to buy £50,000 cars,” according to The Times.
But the decision is expected to frustrate not just electric carmakers but also environmental organizations, which have pressured the government to boost the transition from gasoline and diesel cars to EVs.
“By cutting the grant, the Government may risk people holding on to their older, more polluting vehicles for longer,” RAC head of roads policy Nicholas Lyes said.
Gasoline and diesel-powered cars will not be available for sale from 2030 on, while hybrid cars are also expected to become banned in 2035. Last year, over 100,000 EVs were sold in the country, almost three times more than over the 12 months before that, though it still accounted for just around 1 in 15 new registrations.
“This is not great news for those waiting for delivery of the stylish entry-level Ford Mustang Mach-E as they will find that the price has 'gone up' by £3,000. Many buyers would have been counting on the subsidy,” said Edmund King, President of the Automobile Association.
The latest data from the UK shows Model 3 being the best-selling car in December 2020, with almost 6,000 new registrations.
The UK government is likely to slash EV grants by £500 ($696.80), and Tesla’s best-selling Model 3 and Ford Mustang Mach-E will not be eligible for subsidies anymore.
About the Author
Mariliana has an MSC in Consumer Analytics and Business Strategy. She has a special interest in fast-moving industries and Big Data.