Labour's grants won't save the electric car market

Spectator

9 hours ago

Keir Starmer's government continues to show off its remarkable ability to please absolutely no one. Reintroducing grants for electric cars (EVs) always was an outrage. Why is a government which rails against privilege when it comes to public schools, second homes, etc., splashing out taxpayers' money to subsidise the second cars of relatively well-off motorists? Most people I know with electric cars also have a petrol or diesel car for longer journeys. Moreover, if you are going to chuck a bung worth thousands of pounds at people who buy a car a little less polluting than a petrol or diesel car, what about people who don't buy a car at all and walk and cycle everywhere? They are being far more friendly towards the environment, so shouldn't they get an even bigger handout?
But it seems that fans of electric cars aren't too happy with the new grants either. The government has now published a list of the cars which are eligible for them. And it turns out that there is not a single model which qualifies for the full £3,750. The 22 models listed only qualify for the lower £1,500 handout.
To qualify, a car must be priced below £37,000, have a battery range of at least 100 miles and fulfil sustainability requirements which are somewhat opaque but which are supposed to take in, for example, the sustainability of the energy used in manufacturing the vehicle and transporting it. The result is a bare-faced protectionist device. Every single model eligible for a grant is a European-made car. Thirteen of the 22 models are made by Stellantis – the beleaguered parent company of Vauxhall, Citroen, Peugeot and Fiat which has closed its Luton plant, blaming the government's Zero Emission Mandate (ZEV). The mandate demands that 28 per cent of vehicles sold this year by each manufacturer active in the UK market be pure electric.
Sorry, but bungs of £1,500 a time are not going to save the European car industry from the ZEV, not when new electric cars still typically cost significantly more to buy than the nearest petrol equivalent. True, Peugeot and Citroen are offering large discounts which bring the list prices of their cheapest electric cars down to a similar level to petrol and diesel models, but given that Stellantis managed to lose €2.3 billion (£2 billion) in the first half of this year you wonder how sustainable this is.
Manufacturers face £15,000 fines for every vehicle by which they fall short of the ZEV target. Meanwhile, Chinese manufacturers continue to enjoy a large cost advantage over European competitors owing to sky-high energy prices in Britain and the EU, and their cornering of the EV battery market. While the government is now trying to prop up a flagging European car industry, ministers did nothing to stop the closure of a bioethanol plant on Humberside which has been undermined by high UK energy prices and the removal of tariffs on US imports under Starmer's trade deal with Donald Trump. That will mean the loss of 270 jobs and yet more reliance on imported fuels.
UK governments have always been drawn to trying to bail out the car industry – it is a very visible industry with which the public can identify, unlike boring old chemical plants. Yet decades of government favours ultimately failed to save British Leyland. Don't expect EV grants to be any more successful.