From the TUC

Cuts Watch #115: Low-carbon Vehicles

08 Jul 2010, by in Cuts Watch

The Coalition is reviewing the scheduled £5,000 subsidy for electric vehicles, as part of a shift to less cash support for the motor industry.

In a speech last week to the Society of Motor Manufacturers and Traders, Vince Cable announced that the government had “moved on from the era of subsidies.” In what was possibly a sideswipe at the Automotive Assistance Programme, Mr Cable said, “I don’t see the future as one of large scale support for individual companies.” When he was asked about the future of the planned subsidies for low-carbon vehicles, Mr Cable would only say that the scheme was “still actively under consideration.”

As Tim pointed out last year, the future of the UK motor industry depends on the ability to be ready for a world in which cars must have lower carbon emissions. The last government had a £250 million plan, £230m of which was to be spent on grants of up to £5,000 for buyers of electric, plug-in hybrid and hydrogen cars; the subsidies were due to be introduced in 2011.

It is not clear whether a decision to scrap the scheme would have implications for planned production of the new Nissan Leaf at Sunderland. In March, the company made it clear that their decision to produce at Sunderland included a £20.7 million Grant for Business Investment from the UK Government. In May, Toyota announced that the hybrid Auris would be built at its Derby plant and the engines in Deeside; although the BIS has insisted that no “direct incentives” were offered to the company, the plans for government support for the take up of electric vehicles may well have played a part. General Motors is considering whether to build its electric Ampera model at Ellesmere Port, and the last government’s offer of substantial support is widely believed to have played an important role.

(It seems a long time ago, but the Liberal Democrats were once so enamoured of electric vehicles they wanted to abolish petrol cars by 2040.)

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