The UK government has reviewed its Plug-In Car Grant, and has chosen not only to maintain funding for the £5,000 (US$7,720) electric car buyer incentive until 2015, but has also extended the grant to cover electric commercial vehicles, providing up to £8,000 on each purchase.
Given that EV sales fell short of the UK government’s 8,000 unit incentive cap for 2011, politicians could have easily justified discontinuing the scheme, yet chose not to.
There are numerous countries around the world which offer financial incentives to encourage motorists into ultra-low emissions vehicles. These grants have been designed to help make whole-life costs of qualifying electric cars more comparable with their gasoline or diesel equivalents, until such time as EV manufacturers can increase volume output and lower production costs.
Arguably of greater importance to world leaders, however, is that encouraging buyers into vehicles with zero tailpipe emissions allows governments to meet ever-tightening CO2 emissions targets. The transport sector is seen as key to meeting these targets, and without buyers investing in electric vehicles, CO2 emissions levels will remain stubbornly high.
If governments around the globe are to make the ultra-low carbon car a realistic option, failing to introduce a purchase incentive will only undermine EV sales in the future.
A wider range of qualifying cars is expected to launch over the coming year, including plug-in hybrid cars or, in Renault‘s case, EVs with battery leasing schemes. With more recharging posts installed every day, the next two years will inevitably see more motorists make the switch to electric power.
If governments around the globe are to make the ultra-low carbon car a realistic option, failing to introduce a purchase incentive (or cancelling those currently in existence) will only undermine EV sales in the future. The importance of government grants cannot be understated. It could even be suggested that current incentive schemes do not go far enough.
Some nations do not extend their EV grants to cover electric commercial vehicles, which are often bought by businesses that are keen to cut running costs and help fulfil their environmental commitments. Other governments offer nowhere near enough money to make EVs a realistic prospect for the majority of drivers, while many others run no incentive scheme at all. In the absence of full commitment to a scheme with real impact, modest EV sales and failure to meet emissions targets are the inevitable results.
There are often financial reasons why governments look to reduce or discontinue EV grants. Yet, with valuable tax revenue accrued from every EV sale, leaders could easily continue to offer funds to those willing to join the electric revolution in 2012.
Consumers and businesses are already well aware of the lower running costs and the environmental benefits associated with electric vehicles. They need governments and organisations to allow them to realise these benefits, now more than ever.
The solution is three-fold. Firstly, until sales growth allows production costs to drop, government grants need to be generous enough to bring EVs down to the same price point as an efficient diesel or petrol-powered car.
Secondly, incentives should be provided to fleets and commercial buyers too. These are the groups most sensitive to pricing and total life costs, and therefore most likely to appreciate the benefits of EVs. Incentives could take any form, whether a discount on the initial purchase cost, or even tax breaks for lower running costs.
Thirdly, investment in the EV sector needs to continue while the economic situation remains turbulent. Investment in EVs and the recharging infrastructure will not only help politicians meet ever-more stringent emissions regulations, but will also stimulate growth as the industry expands.
And expand it will. Consumers and businesses are already well aware of the lower running costs and the environmental benefits associated with electric vehicles. They need governments and organisations to allow them to realise these benefits, now more than ever.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Calvey Taylor-Haw is Managing Director of Elektromotive
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