Electric Car Grant will have minimal impact – Indicata
New analysis has found that the government’s new Electric Car Grant will not have the intended impact on electric car sales.
According to automotive data intelligence company Indicata, the £650m investment which will offer discounts of up to £3,750 on new electric car purchases will only support between 5.8% and 14.4% of annual EV sales.
Its white paper, ‘UK Electric Car Grant Program: New car market impact and BEV residual value analysis’, says the investment is more ‘about government optics than material market effect’.
It compares the grant to a similar policy in Italy, which introduced support of up to £4,350 for electric vehicles but EV registrations remained at 4.2%.
Targeted support
Andy Shields, Indicata’s global business unit director, said: “The reality is that this programme, while well-intentioned, will function more as targeted support for specific market segments rather than a broad market transformation tool that many were expecting.
“When we look at the Italian precedent, where similar support levels failed to materially impact BEV registration rates, we have to question whether this £650m investment will deliver the market change the government is seeking.”
The paper predicts that the grant programme will downward pressure on residual values of models under a year old, but vehicles aged three years or more will see minimal impact due to weaker correlation between new and used vehicle pricing.
Government optics
Shields concluded: “This is more about government optics than material market effect. The ZEV Mandate, with all its negative side effects for the industry, will continue to be the driving force in the market.
“For OEMs, dealers, and fleets, there’s still no light at the end of the tunnel – just a politician with a dim candle trying to shine a light on their environmental credibility.
“As the UK moves toward its net-zero commitments, this Electric Car Grant programme provides a framework for future policy intervention. However, the ZEV Mandate targets, despite recent adjustments, combined with this new grant, are likely to become even more unsustainable for the UK automotive industry. The government will have to respond again.”
