New £640m grant scheme to make EVs affordable and spark sales boom | Personal Finance | Finance

Electric car grants are making a comeback in a £640 million scheme designed to revive lacklustre sales and bring cleaner motoring within reach of ordinary families.

In a major policy shift, ministers are expected to unveil plans this week to slash upfront costs for drivers looking to switch to battery-powered vehicles.

The return of taxpayer-funded support marks the first time since 2022 that private buyers will be eligible for EV handouts.

Industry experts have long warned that the high purchase price is deterring motorists from making the switch – despite falling second-hand prices and tax perks for company car drivers.

Quentin Willson, the former Top Gear presenter and founder of the EV campaign group FairCharge, said the scheme could prove pivotal.

“Support for private EV buyers, who have been neglected by both political parties, is long overdue and has the potential to be the firecracker needed to drive demand and stimulate the entire EV sector,” he told the Times.

“Let’s hope this is a carefully crafted strategy that provides support for drivers on lower incomes.”

The new scheme is expected to focus support on lower-cost and UK-built electric cars, with pricier models such as Teslas excluded from the grants.

Heidi Alexander, the Transport Secretary, acknowledged public reluctance to embrace electric vehicles amid cost concerns.

“We do know that the high upfront purchase cost of EVs is something that people are wary about,” she told the BBC.

“I think we’ve got to be honest and say there are a lot of people out there who think that EVs are just for the very wealthiest.”

While sales of electric vehicles rose 39.1% in June to 47,354 units, according to the Society of Motor Manufacturers and Traders (SMMT), the market has been overwhelmingly driven by fleet buyers taking advantage of corporate tax breaks.

Less than one in five battery EVs sold now go to private individuals, with adoption by this group down 10.8% this year.

Dan Caesar, chief executive of trade body Electric Vehicles UK, said public perception still lags behind the falling costs of used models.

“While battery EVs, especially used ones, are already available at extremely competitive prices, perception amongst the public is that electric cars are more expensive,” he said.

“Intelligently targeted grants for drivers could tackle this misperception and light the blue touchpaper that accelerates demand in the UK. More than 9 out of 10 EV drivers will not return to conventional cars, but new buyers need a nudge to get them to try new technologies.”

Official data shows average used EV prices have plummeted 46% since 2021, compared with a 19% for petrol and diesel models.

The original plug-in car grant was launched by the Conservatives in 2011, offering up to £5,000 to early adopters of ultra-low emission vehicles. However, it was gradually wound down, falling to £1,500 before being scrapped altogether in 2022 by then Transport Secretary Grant Shapps, who declared the support had “successfully kickstarted the electric car market”.

Yet more than a decade on, concerns remain that Britain is falling behind in the race to decarbonise its roads.

A recent SMMT survey of auto industry bosses found 55% believe the UK is not on track to meet the 2030 ban on new petrol and diesel car sales.

Ginny Buckley, chief executive of consumer site Electrifying.com, warned that without direct help for everyday buyers, the EV transition could leave many behind.

“Despite a new electric car being registered every 60 seconds in June, sales to private buyers have stalled while fleet buyers continue benefiting from substantial tax breaks on EVs,” she said.

“Our November survey of over 11,000 UK drivers found 76% were put off by upfront EV costs. However, this help needs to be targeted to those who most need support to ensure nobody in society gets left behind on the electric journey.”

The full details of the new grant package are expected to be published on Tuesday.