Tuesday 6 July 2010. The Green Piece Column.
It appears that the UK Government’s proposed £5,000 electric car incentive is under threat amid a series of cutbacks on national spending.
Last Wednesday, Business Secretary Vince Cable warned the Society of Motor Manufacturers and Traders (SMMT) that while the Government will stand by the industry with “genuinely affordable” support it “can’t fight” and “can’t win” a subsidy battle. He also failed to confirm the fate of Labour’s pledge to subsidise new electric cars by £5,000 even on the same day that the Government’s climate change advisers said that the vehicles were one of four key focus areas in the bid to hit legally binding carbon budgets.
Why are the incentives under threat?
In an interview with the Daily Telegraph last week, Mr Cable warned manufacturers that the Government “can’t go around waving a chequebook at British industry” after the Labour government had offered state aid to help attract Nissan and Ford to bring their low carbon production lines to the UK and set up the vehicle scrappage scheme.
Though he commented that he was not “downing the past”, Mr Cable believes that we are now in a different era and that there is a difference between liberal and laissez-faire. He instead wants the Government to act as a facilitator to bring industry and researchers together and to help encourage research commercialisation.
Mr Cable’s statement has received backing in some surprising quarters. Carl Peter-Forster, the chief executive of electric sports car maker Tesla Motors, has backed the comments – he stated that car makers should not be seeking money, but should instead be working with the Government on “joint and collaborative research and development projects.”
The response
With the electric car incentive appearing to be under threat, some of the leading car manufacturers have been quick to point out that the UK will be significantly less attractive without it.
In what appears to be a subtle warning, Citroen, Mitsubishi, Nissan, Renault and Peugeot all wrote to Mr Cable and Transport Secretary Phillip Hammond to state that “as businesses we will target the markets that provide the best environment for selling our vehicles” while pointing out that their companies are “uncertain of the government’s position”.
The manufacturers had all planned to mass market electric cars in the UK next year and believe that the vehicles are critical to the growth of green sector jobs. Without the proposed plug-in car grant, then Nissan’s LEAF vehicle for example, which is due to be built in Sunderland, could take a significant hit in sales.
A report from the Committee on Climate Change (see article) also suggests that electric car investments must be preserved. It wants to see a programme of incentives and disincentives to encourage generators to adopt low carbon technologies while also outlining the need for more ambitious targets for electric cars on the road.
Our verdict
With the new Coalition Government feeling the need to cut back on spending across the board it’s no surprise that the electric car incentives would come under threat – however, it’s important that their potential impact on the economy is not overlooked before the axe is wielded.
The recession has given the impression that progress is being made in the effort to reduce emissions when in fact it is a reduction in economic activity that has primarily driven the emissions fall. For the UK to secure a low carbon recovery it needs to be at the forefront of the green sector and this means applying suitable investment to attract environmentally conscious businesses and prompt a green recovery.
Whether the £5,000 incentive for electric car buyers is the answer is open for debate. Electric car take-up is likely to be slow at first anyway, particularly without the necessary infrastructure in place and with prices high (even after the subsidy) because the technology is so new. As competition builds, electric car prices should naturally begin to fall and take-up will rise.
However, to abandon support of electric vehicles altogether would be foolhardy. Governments around the world have committed strongly to this new era of electrification and manufacturers have followed suit. Even if the electric car incentive for buyers is to be reduced, it should be redirected towards the support of charging infrastructure and increased use of renewable energy by the National Grid.
Electric vehicles are critical to the growth of green jobs with climate and energy secretary Chris Huhne even stating that such posts are central to the Government’s job creation plans. It’s vital then that the Government does not back out at the last minute and risk being left behind the rest of the world in a cloud of ‘zero emission’ smoke.
Faye Sunderland
