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Minister signals shift away from electric vehicle 'buyer subsidy' to lower costs

“We cannot transition to a low carbon economy through government subsidy"; Claire Perry, energy and clean growth minister.

“We cannot transition to a low carbon economy through government subsidy"; Claire Perry, energy and clean growth minister.

Recent cuts to the grants available for the purchase of electric vehicles are intended to move the sector away from “buyer subsidy”, according to energy and clean growth minister Claire Perry.

Speaking to the business, energy and industrial strategy select committee, she added that grant payments potentially offered cash to vehicle owners who could already afford to pay for electric vehicles.

Plug-in car grants for new plug-in hybrids were recently scrapped earlier, while cash for fully electric vehicles were cut from £4,500 to £3,500.

Perry added that public grant reductions would help lower the cost of electric models, suggesting that vehicle manufacturers were selling their vehicles at lower prices in other markets. She added that consumer demand for lower prices would see companies respond.

“We cannot transition to a low carbon economy through government subsidy. Somebody has to pay; it’s either taxpayers, consumers or shareholders and there is a constant interplay of these three,” the minister said.

Perry went on to place more focus on the role of government to grow the infrastructure required to accommodate increased numbers of EVs, which would help to grow the market in tandem with falling costs.

“We can no longer define success as how much government subsidy is going into a particular technology, we need to define it based on what is actually happening.

“Subsidising or not is not going to change the market, what is going to change the market is a rapid reduction in technology costs and investment in infrastructure,” she told the committee.

The Treasury is in the process of selecting a fund manager for its Charging Infrastructure Investment Fund, a £400 million public-private pot to be used to grow an infrastructure network “that is easy for current and prospective drivers to locate and use, and is affordable, efficient and reliable”.

Principle selection and an announcement of preferred manager of the fund, who will raise up to £200 million to invest in businesses and projects within the EV charging sector, is expected to take place before the end of the year.

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