Auto industry in shock and fuel prices soar as government scraps all subsidies for electric vehicles

Tuesday, June 14, 2022 12:11 PM

An electric vehicle being charged

Automotive groups have criticized the government’s decision to remove subsidies for newly purchased electric vehicles (EVs), fearing it will deter buyers from entering the market.

In a shocking blow to the car industry, the Department for Transport (DfT) has revealed that £1,500 grants for the purchase of new electric cars costing less than £32,000 have been scrapped.

The DfT has argued that the ‘success’ of the plug-in car grant means the government will now ‘redirect’ funding to encourage users of other vehicles to switch to electric vehicles.

Existing grant applications “will continue to be honoured”, the DfT added.

Transport Minister Trudy Harrison said: ‘Government funding must always be invested where it has the greatest impact if this success story is to continue.’

“Having successfully launched the market for electric cars, we now want to use plug-in subsidies to match that success on other types of vehicles, from taxis to delivery vans and everything in between, to help make the switch to cheaper and easier zero-emission travel.”

She argued that the government continues to invest record amounts in the transition to electric vehicles – with £2.5billion injected since 2020 – and that Downing Street has set the most ambitious phase-out dates for electric vehicles. new diesel and gasoline sales from all major countries.

Automotive groups attack subsidy cuts

Downing Street has targeted 2030 for the phasing out of sales of new petrol and diesel cars in the UK.

However, motoring groups have suggested that this goal would be difficult to achieve without grant support;

The AA criticized the decision, warning that many motorists forced to wait for a new electric vehicle due to global supply constraints will lose out.

Its chairman, Edmund King, said the subsidies were “essential for many drivers switching from petrol to diesel”.

He said: “The plug was pulled at the wrong time on this significant grant before many users, still waiting for delayed EVs due to global shortages, made the switch. Drivers, and indeed many fleets, planning to switch to electric vehicles can now back off until they find more money.

Rival car group RAC has also questioned the move, raising fears that the lack of financial support for aspiring electric vehicle owners could stifle the UK’s green ambitions.

Policy chief Nicholas Lyes said: “The uptake of electric cars in the UK has been impressive so far, but to make them accessible to all, we need prices to come down – read more about the road is an important means of achieving this, we are disappointed that the government has chosen to end the subsidy at this stage If the costs remain too high, the ambition to get most people to adopt electric cars will be muffled.

Sales of all-electric new cars have risen from less than 1,000 in 2011 to nearly 100,000 in the first five months of 2022/

This suggests electric vehicles are finally making their way into the mainstream, with sales overtaking diesel vehicles last year.

Gasoline prices hit new highs as CMA reviews retail markets

The removal of subsidies for electric vehicles comes amid soaring forecourt prices, with gasoline prices hitting new highs in Tuesday’s trading.

The average price of a liter of petrol on UK forecourts hit a new record high of 185.4p yesterday, an increase of 6.9p in just one week.

This follows a 10p rise in petrol prices in May.

Concerns over prices at the pump have led the Competition and Markets Authority to launch a retail market review, with Business Secretary Kwasi Kwarteng fearing fivepence fuel tax cuts will not be met. passed on to consumers.

Petrol prices hit record highs on the forecourts (Source: RSC Fuel Watch)

Last month, Tom Hatton, head of product management at analytics group Kalibrate, said AM City gasoline retailers fail to engage in wholesale profits despite record high prices on the forecourt,

Instead, he suggested that fuel sellers were raising prices for consumers in line with rising wholesale costs faster than in the past, with retailers being more cautious in the face of soaring oil prices and geopolitical volatility.

He argued: “We haven’t seen cumulative increases like this in years and years.”