Electric Car Price Premium Hits Record Low Thanks to Grant

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In an exciting turn of events for electric vehicle (EV) enthusiasts and environmentally conscious consumers alike, the price premium for electric cars over traditional internal combustion engine (ICE) vehicles has plummeted to a record low. Thanks to the UK Government’s Electric Car Grant and proactive measures taken by car manufacturers, owning an electric vehicle has never been more accessible.

According to a recent campaign launched by Autotrader, ChargeUK, and the Society of Motor Manufacturers and Traders (SMMT), the upfront price difference between new electric cars and their ICE counterparts has now shrunk to just 19%, equating to approximately £8,299. This marks a significant decrease from the 33% premium observed just a year ago, indicating a shift in the automotive landscape towards more affordable electrified options.

This is a historic moment for the EV market, as it is the first time that the upfront price disparity has dipped below the 20% threshold. This change can be attributed to various factors, including the implementation of the Government’s Electric Car Grant (ECG) introduced in July, which incentivises the purchase of electric vehicles priced at £37,000 and below. Manufacturers have also adjusted their pricing strategies to qualify for this grant, ultimately benefiting consumers.

Furthermore, the growing diversity of models available on the market has contributed to this positive trend. Consumers can now choose from a wider array of electric vehicles, including popular models like the Renault 5, starting from £21,495, and the MG 4, priced from £27,245. Impressively, the selection of budget-friendly electric vehicles is on the rise, with 37 new models available for under £30,000, up from 33 just three months ago.

Data from Autotrader indicates that the launch of the Electric Car Grant has sparked a notable increase in consumer interest in electric vehicles, marking the highest spike in demand in three years. This surge in interest comes on the heels of rising energy prices triggered by geopolitical events, such as Russia’s invasion of Ukraine.

Since the introduction of the grant, discounts on new electric cars priced at £37,000 and below have risen by 2%, compared to a mere 0.5% for petrol and diesel vehicles. This trend suggests that the market is responding positively to the incentives aimed at boosting electric vehicle adoption and making them more competitive.

Moreover, the introduction of the Electric Car Grant has also encouraged manufacturers whose models do not qualify for the grant to offer additional incentives, further enhancing the attractiveness of electric vehicles.

Keir Mather, the under-secretary of state for transport, remarked on this encouraging development: “Owning an electric vehicle has never been more affordable thanks to our drive to make EVs cheaper and more accessible. With our Electric Car Grant offering discounts of up to £3,750 and over 85,000 public chargers now in place across the UK – with one added on average every 31 minutes – we’re bringing down costs and boosting the convenience of owning an EV, helping more families make the switch and save as they do.”

Colin Walker, head of transport at the Energy & Climate Intelligence Unit, echoed Mather’s sentiments, stating that the research indicates the “days of EVs being playthings of the wealthy are long gone.” He further noted that as the upfront prices of new electric vehicles continue to fall, the savings associated with EV ownership are expected to improve significantly. “While price parity approaches for new EVs, it has already been reached on the second-hand market – where most of us buy our cars. Second-hand EVs can deliver annual savings in ownership costs of £1,600 a year, which can be enjoyed the moment drivers get their hands on the keys,” Walker added.

Vicky Edmonds, CEO of EVA England, a not-for-profit membership organisation supporting electric vehicle drivers, welcomed the positive findings. She stated, “Ensuring EVs are affordable for most is the key to a successful transition to electric, making today’s news very welcome that the price difference between EVs and petrol and diesel cars is at its lowest level ever. While cost is only one factor, greater affordability and an increasing range of options are hugely important for drivers who are, in increasing numbers, seeing EVs as the solution that serves their everyday needs.”

This remarkable shift in the electric vehicle market is not just about numbers; it represents a significant step towards sustainability and a greener future. As we witness the cost barriers associated with electric vehicles diminishing, it paves the way for more consumers to consider making the switch to cleaner, more environmentally friendly alternatives. The ongoing evolution of the electric vehicle market, combined with government incentives and broader consumer awareness, paints a promising picture for the future of transportation in the UK.

As we move forward, it becomes imperative for both consumers and manufacturers to continue embracing electric vehicles. The benefits extend beyond mere financial savings; they also encompass environmental stewardship and a commitment to reducing carbon emissions. Each electric vehicle on the road contributes to a cleaner air quality, helping combat climate change and create a healthier planet for future generations.

In conclusion, the trend of decreasing price premiums for electric vehicles signifies not only an economic advantage for consumers but also a pivotal shift in the automotive industry towards a more sustainable future. As we celebrate this progress, let us remain committed to advocating for policies that support the growth of the electric vehicle market, ensuring that affordability and accessibility remain paramount. Together, we can drive towards a net-zero future, where electric vehicles play a central role in our daily lives.