Changes to the Electric OLEV grant and effect on consumers

The government has reduced the financial incentive for buyers of electric cars. In a similar vein, the government has removed it entirely for buyers of expensive models. The budget 2020 has slashed grant to buy an electric car by £500 to just £3,000, while also removing it for cars that cost more than £50k, including Tesla’s Model S and X. However, according to the Chancellor’s Budget document, the Plug-In Car Grant has been extended for a further three years to 2023. There is also the removal of the “expensive car” prestige road tax on all electric cars, which could lead to savings of as much as £320 per year from year 2 to year 5 of its life.

Over the years, the grant has helped over 200,000 Britons to purchase low-emission cars and was originally meant to expire at the end of March. Consequently, there is a possibility of a decline in the demand for Electric OLEV in the short run, following the reduction in incentive. Chancellor Rishi Sunak has however stated that there will be a fresh investment of £403million to keep the cost of electric cars low for the next three years.

Major stakeholders in the auto industry have also given their take on the recent development. Tom Clarke, head of electric vehicle strategy at LV= General Insurance, said according to a survey done by the company, 29 per cent of drivers are considering buying an electric car in the next five years.

While the cost of purchasing an electric car remains higher than a petrol or diesel car it’s vital that people are offered financial incentives to make it easier for them to switch to electric,” Tom said.

The government has also pledged the investment of £500million for the installation of rapid charging hubs across the country, allowing drivers to replenish the batteries in their electric cars as quickly as possible. 

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