In June 2022, the Johnson Conservative Government removed electric cars from the plug-in grant scheme, a scheme which promotes the purchase of various electric vehicles through subsidies. This caused retaliation from motoring industries, as it seemed counterintuitive to the Climate Change Act 2008. Theoretically, the subsidy should increase the selling of electric cars, reducing air pollution, noise pollution and dependence on fossil fuel. However, these positive externalities may not suffice the justification of expending more of the government’s money to this scheme.
No guarantee in success
The term ‘range anxiety’ came about after the birth of electric cars, defined as the fear that the car’s battery will run out before the driver reaches their destination. Furthermore, manufacturing errors have caused these cars to explode in the past so there is still a collective scepticism which may add to the electric car’s price inelasticity, hence, prove that the subsidy is not enough to promote its sales.
In the USA, it was discovered that electric car grants tend to go to some of the wealthiest customers, and one of Labour’s missions is to ensure that electric cars ‘do not become the preserve of the wealthy’. If the UK follows the patterns of the USA, the subsidy fails to provide increasingly distributional access of electric cars across all classes, and if the subsidy is increased to meet these equity concerns, the cost-benefit ratio would count as inefficient, especially when the UK is already indebted of over 50 billion pounds.
Money used right
The plug-in grant scheme has shifted focus to expanding the public charge point network instead, indicating that the government has acknowledged the ‘range anxiety’ of the public, and now desires to set stronger foundations before promoting the sales of this electric vehicle. Seeing more charging stations will add to the marketing touchpoints between the customer and the electric car, therefore, increasing the likelihood of this vehicle to be sold.
Furthermore, the plug-in grant scheme still includes deductions for the electric alternative to taxis, vans, trucks, motorcycles, and wheelchair accessible vehicles. The motorcycle has been most polluting for many years – even more polluting than diesel cars, whilst only being a single occupant vehicle. This must be addressed because the demand for delivery bikes, as well as delivery vans, has been increasing since the pandemic, when online shopping displayed its convenience. Investing more in these economically vital vehicles should not be undermined just because electric cars are not given the same attention.
The scheme’s focus on electric wheelchair accessible vehicles and taxis has become relevant this year as the North Yorkshire Council proposed a policy which requires all taxis to be either electric or wheelchair accessible. This causes the uncomfortable choice of giving up either the convenience of those in need, or the progression of air quality. With the hackney carriage business growing, it is best that the government subsidises vehicles that deal with both dilemmas, allowing people with disabilities to also contribute to the Climate Change Act, so that the country acts as one.
Alternatives to net-zero
The Labour Government has lifted the ban on onshore wind farms and plans to rapidly expand the sizes of onshore and offshore wind farms by 2030. At the moment, most of the UK’s energy is imported but if Labour keeps their promises, the UK will become more energy independent, leading to cheaper energy for the people. Perhaps this will alleviate the costs of powering all kinds of electric vehicles.
Technology in progress
Predominantly, what makes the electric car so expensive is the lithium-ion battery. However, companies in China are experimenting with sodium-ion batteries, which are cheaper, more abundant, better adapted to cold weather, and less prone to exploding. Further enhancement is needed as sodium-ion batteries take longer to charge, with a lower energy density, but sodium-ion batteries are already being used for some e-bikes in England; there is indication of improvement.
A thought for the future
To conclude, the government arguably has no obligation to reintroduce the plug-in car grant as progress is swiftly being made: increasing the accessibility of electric cars; decreasing the UK’s carbon emissions; relieving stressful connotations surrounding electric cars; building the delivery industry; and providing equity. Beginning the electric car revolution with a subsidy has increased sales enough to spread further awareness to the public and so far, the UK has never exceeded the carbon budgets placed by the Climate Change Act. However, both the government and us, as individuals, must not become lenient with our environmental actions, ensuring that we never have to consider this subsidy again.
Eden Sung is a student at Sir William Perkins' School, and was one of our five finalists of the Young Economist of the Year competition 2024.
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