UK Government Launches $7,800 Electric Car Grant Scheme

Electric vehicles are set to experience a breakthrough in 2011 due to a £5,000 car grant introduced by the government today, experts predict.

Motorists will have a choice of just one subsidised car to buy outright as the project is launched – the Mitsubishi i-MiEV – but should have a choice of nine or 10 fully electric and plug-in hybrid cars by 2012.

Among the first available to buy will be the Nissan Leaf in March, which is billed as the first mass-market electric car. It is currently being made in Japan and will be made in Sunderland from 2013 onwards.

It will join several models only available to lease from January, including the Peugot iOn, Citroen CZero and an electric version of the Smart fortwo.

“This is a breakthrough year,” said Chris Paine, director of the cult documentary, Who Killed the Electric Car? “In the first time in 90 years, people will actually have a chance to buy electric cars from major carmakers. Tesla, Nissan and GM are first out of the gate and almost every other car company has announced plans to join the race in 2012 and beyond. That’s what makes the next few years so exciting.”

Paine has a new documentary out later this year, Revenge of the Electric Car, telling the story of the competition between the three rivals.

The plug-in car grant was conceived as a £230m incentive by the Labour government to cut the upfront cost of electric vehicles, which typically cost at least a third more than rival, conventional combustion engine cars. The subsidy survived the coalition’s cuts with the proviso that it will be reviewed in 2012 – only the first year of funding, £43m or 8,600 cars, is guaranteed.

Although more expensive to buy, electric cars are cheaper to run than conventional ones. Edmund King, the AA’s president, said a car such as the Leaf would cost 2p per mile to charge and run, compared to around 14p per mile for a similar-sized petrol or diesel car. They also pay no vehicle excise duty, have cheaper insurance premiums, are exempt from London’s Congestion Charge and can be charged for free at some public car parks.

Other countries are offering or planning electric car grants, hoping to attract car manufacturers and supply chains to create green jobs. The US gives motorists a $7,300 (£4,708) tax credit for cars such as the Volt and Leaf, China offers electric car-makers £4,721 per car and France has a €5,000 (£4,240) grant scheme.

The transport secretary, Philip Hammond, said: “A few years ago, ultra-low emission cars with mass-market appeal appeared just a pipe dream. Now they are a reality and we can have all the convenience of the car without all the carbon that normally goes with it. Government action to support affordable vehicles and more local charging points means we are on the threshold of an exciting green revolution – 2011 could be remembered as the year the electric car took off.”

“Global car-makers are now entering the fray,” said Keith Johnston, who launched the pioneering G-Wiz electric car in the UK in 2005 and runs electric car consultancy connEVted, “which means some early electric car companies will fall by the wayside, but prices should also drop, which is good for consumers. I’ve seen a lot of headlines saying ‘2011 will be the year of the electric car’. Well, I think it could be.”

Electric cars are seen as a means to cutting carbon emissions by 40% or more, improving air quality in cities and – in the case of US motoring giant GM, with its just-launched Chevy Volt – reviving car-markers’ fortunes.

While just 55 electric cars were sold in the UK in 2009, with buyers holding off until today’s grants took effect, the government’s climate advisers, the Committee on Climate Change, says the country needs 1.7m of them by 2020 to help meet the country’s tough carbon targets.

But analysts caution that electric cars’ breakthrough in 2011 may be more symbolic than substantial. “It might be the first year people notice electric cars driving around – normal people rather than G-Wiz owners,” said Andrew Close, European manager for powertrain forecasts at IHS Global Insight. “But 2011 will not see any breakthrough in volume [of cars on the road], though it will be a considerable jump from before. 2011 is way too early, £5,000 or not – the vehicles are expensive, constrained in supply and there are still too many good [conventional car] alternatives.”

Close added that it is highly unlikely the first year of the grant fund will be fully spent, and that “optimistically” only around 4,300 will be sold before the scheme is reviewed next year. The climate committee’s call for 1.7m electric cars in the UK by 2020 was extremely optimistic, he said, and would require batteries to become much cheaper and conventional cars far more expensive through taxation and fuel prices. A more realistic figure would be 0.8-1m cars by 2020. Nissan has received 350 pre-orders for the Leaf so far, part of a total of 27,000 pre-orders worldwide.

There are several potential roadblocks to electrifying Britain’s fleet of 31m cars. Johnston warned of the uncertainty and “hiatus” that would occur if the government fails to continue the grant after its first year. “There was a government grant of £1,000 when we launched the G-Wiz [in 2005]. Two weeks later it disappeared, which killed the market,” he said.

Paine said: “It’s critical that government grants and incentives continue. Oil has been subsidised for years and that’s allowed it a strangehold on the economy. For electric cars to really compete it needs help in the first years to get into truly mass production.”

Public charging points to top up the cars are also in short supply, with just a few hundred in the UK, mostly in London.

The government does not even know exactly how many points currently exist, though it is putting £20m towards regional partnerships to install 4,000 points by 2015. Most of the new generation of electric cars have a maximum range of 100 miles.

And there are still some doubts over motorists’ appetite to get behind the wheel. In Spain, which offered a grant up to €6,000 per car, a target of selling 2,000 electric cars last year was missed by a wide margin – just 16 had been registered by August.

Electric dreams

• Mitsubishi i-MiEV – to buy from January 2011. £28,990

• smart fortwo electric drive – on lease in January 2011 (but you won’t be able to buy it until 2012. Lease and on-sale price yet to be agreed.

• Peugeot iOn – to lease from January 2011. £415 per month.

• Nissan Leaf – to buy from March 2011. £28,350.

• Tata Vista – to buy from “early summer” 2011. Price not yet agreed.

• Citroen CZero – lease from early 2011. £415 per month

• Vauxhall Ampera – to buy from early 2012. £33,995

• Toyota Prius Plug-in Hybrid – to buy from early 2012. No price yet, but latest Prius is £21,929, so expect around the £27,000 mark

• Chevrolet Volt – to buy from early 2012. Price not yet set.

• Tesla Roadster – available to buy now for £87,945. Technically eligible for grant, but has not completed registration process yet.

Article by Adam Vaughn, appearing courtesy ecopolitology.