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By Tom Pyman and for MailOnline and Rob Hull for This is Money

Grants for electric cars are expected to be cut by £ 500 and will no longer apply to the best-selling Tesla vehicle under new plans.

A government action to encourage more green vehicles on the road has resulted in a subsidy of 35 percent of the purchase price of certain models up to a maximum of £ 3,000.

However, a surge in demand has put a lot of strain on the scheme, meaning the highest subsidy available will be cut to £ 2,500, while the upper limit of eligible cars will be lowered from £ 50,000 to £ 35,000.

As a result, Tesla’s popular Model 3 – consistently Britain’s best-selling electric car in the past 12 months – is no longer covered by the grant due to its £ 40,500 price tag.

Tesla's popular Model 3 (pictured) - consistently Britain's best-selling electric car for the past 12 months - is no longer covered by the grant due to its £ 40,500 price tag

Tesla’s popular Model 3 (pictured) – consistently Britain’s best-selling electric car for the past 12 months – is no longer covered by the grant due to its £ 40,500 price tag

Announcing the cuts on Thursday morning, Transportation Secretary Rachel Maclean said: “ We want as many people as possible to be able to make the switch to electric vehicles as we want to reduce our carbon footprint, pursue our net zero ambitions and want to reach a higher level. right across the UK.

The increasing choice of new vehicles, growing customer demand and the rapidly increasing number of charging points mean that while funding levels remain high given rising demand, we are refocusing our vehicle subsidies towards the more affordable zero-emission vehicles – which most consumers are looking for. will look and where taxpayers’ money will make the difference.

“We will continue to review the subsidy as the market grows.”

The new restrictions mean that models such as Ford’s new Mustang Mach-E, which is expected to hit the market soon, will also not be covered by the grant, although ministers insist that overall electric vehicle financing will remain unchanged, with more than half of the plug-in models still eligible. for the scheme, even after the change.

“ Today’s news from the UK government that plug-in subsidies for passenger and commercial vehicle customers are being cut is disappointing and not conducive to supporting the zero emissions future we all want, ” said Graham Hoare, Ford UK chairman .

“ Robust incentives – both purchase and use incentives – that are consistent over time are essential if we are to encourage consumers to adopt new technologies, not only for all-electric vehicles, but also for other technologies, such as plug -in hybrid electric vehicles paving the way for a zero-emission future. ‘

But the decision was made with the view that taxpayers should “ not subsidize people to buy £ 50,000 cars, ” Whitehall sources told the Times

The pot will instead spread out thinner for the next two years.

However, it is likely to cause furore not only with manufacturers, but also with environmental groups, who have urged the government to introduce more incentives to help drivers switch from gasoline and diesel cars to less polluting models.

Gasoline and diesel cars and vans will no longer be sold by 2030, before hybrids are also banned five years later as part of the drive for greener cars on the road.

Last year, more than 100,000 plugins were sold, almost three times as many as in the previous 12 months, but that still only accounted for about one in 15 new registrations.

The Ford Mustang Mach-E (pictured), which will arrive in the UK in a few weeks, will also not be covered due to the lowering of the subsidy price cap.

The Ford Mustang Mach-E (pictured), which will arrive in the UK in a few weeks, will also not be covered due to the lowering of the subsidy price cap.

The Ford Mustang Mach-E (pictured), which will arrive in the UK in a few weeks, will also not be covered due to the lowering of the subsidy price cap.

The Plug-in Car Grant was launched in 2011 to promote the purchase of greener cars.  At the time, the grant value was up to £ 5,000 off the price of a new electric car.  The value of the grant is now half that amount

The Plug-in Car Grant was launched in 2011 to promote the purchase of greener cars.  At the time, the grant value was up to £ 5,000 off the price of a new electric car.  The value of the grant is now half that amount

The Plug-in Car Grant was launched in 2011 to promote the purchase of greener cars. At the time, the grant value was up to £ 5,000 off the price of a new electric car. The value of the grant is now half that amount

Edmund King, the AA president, told the paper: “ This is not great news for those waiting for delivery of the stylish entry-level Ford Mustang Mach-E as they will find the price ‘up’ by £ 3,000 . Many buyers would have counted on the subsidy.

“On the other hand, most drivers knew that the ‘free ride’ would not last forever and that at least more early adopters should be able to benefit from a further spread of the subsidy.”

RAC head of road policy Nicholas Lyes says ministers are talking when it comes to encouraging people to use cleaner vehicles, but cutting out car funding for plug-ins is certainly not the walk.

The auto group spokesperson says the timing of the announcement couldn’t be worse as the industry has already been hit hard by the pandemic, with incentives like the Plug-in Car Grant ‘essential’ to get consumers going green at a time. in which they are personal. finances are affected.

“While more models are coming to market, our research suggests that upfront costs are still a concern for drivers when comparing the cost of an electric car to a conventional car of a similar size,” Lyes told us.

‘By lowering the subsidy, the government risks people sticking to their older, more polluting vehicles for longer.’

The subsidy to stimulate the purchase of electric and – at the time – hybrid vehicles was launched in 2011.

When it arrived a decade ago, it offered to pay £ 5,000 for the price of a new electric car and some plug-in hybrids to reward early green vehicle users.

This was then reduced to £ 4,500 and reduced again to £ 3,500 in October 2018 as the government wanted to limit the incentive.

Commenting on the news, Mike Hawes, CEO of the Society of Motor Manufacturers and Traders, said the decision to scrap the Plug-in Car Grant is the “wrong move at the wrong time.”

In a statement this morning, he said: “New electric battery technology is more expensive than conventional engines and incentives are essential to make these vehicles affordable for the customer.

“By cutting subsidy and becoming eligible, the UK is lagging even further behind other markets, markets that increase their support, making it even more difficult for the UK to get enough supply.

“This sends the wrong message to consumers, particularly private customers, and to an industry that is being challenged to fulfill the government’s ambition to be the global leader in the transition to zero-emission mobility.” ‘

By lowering the subsidy, the government could run the risk of people sticking to their older, more polluting vehicles for longer, according to the RAC

By lowering the subsidy, the government could run the risk of people sticking to their older, more polluting vehicles for longer, according to the RAC

By cutting the subsidy, the government risks people sticking with their older, more polluting vehicles for longer, says the RAC

Sue Robinson, Chief Executive of the National Franchised Dealers Association, which represents UK car and commercial vehicle dealers, added: “Electric vehicle sales are performing well, but still represent a relatively small portion of the overall market; The timing of the subsidy cut is unfortunate, as a number of private customers are currently waiting for showrooms to reopen to familiarize themselves with new types of vehicles, including electric vehicles. ‘

Jim Holder, editor-in-chief of What Car? Said lowering the subsidy and limiting availability for more expensive plug-in models could potentially limit the government’s drive to encourage more drivers to switch on electric vehicles in the run-up to the 2030 ban on new gasoline and diesel passenger cars.

He explained, ‘Right now, searching and asking for electric cars about which car? are at an all-time high. This news is sure to dent that long run – although there could be a little rush to secure the extra discount if the opportunity persists for a short period of time.

There are also broader implications: cutting the subsidy will only widen the gap between EV and ICE [internal combustion engine] prices and highlights a worrying underlying perception that electric cars are the preserve of the wealthy.

Likewise, the elimination of the subsidy threatens the already razor-thin profitability of electric vehicle sales in the UK – with huge subsidies available in countries like France and Germany, manufacturers are likely to focus supply on those countries, making the transition to electrification in the US is being curtailed again. UK.

While it was inevitable that the root of the grant would diminish over time and eventually be replaced by punitive measures, this feels too early to take another step on that journey. The 2030 incineration-only ban was announced with much fanfare – the thinking behind how to make the transition to that goal seems troublingly confused, and this decision is further proof of that. ‘