Britain has acted to cut its electric vehicle subsidy program by nearly 82 percent, as the government acts to drastically slash public spending. The money had been approved by the Labour party in March to help facilitate early market acceptance of plug-ins. Since then, Britain has had an election, changed Prime Ministers, and been forced to take immediate action to correct a massive £156 billion budget deficit. (Even the country's Olympic teams may lose up to 50 percent of their funding.)
The per-vehicle subsidy structure for the program has been preserved, cutting 25 percent off of the sticker price of zero-emissions vehicles, up to £5,000. But of the original £230 million granted in the Labour bill, just £43 million will now go to early EVs—meaning the money could run out after just 8,600 vehicles.
Will that be enough to build a permanent market for electrified transportation in Britain? Probably not. Nearly 2 million new cars and trucks are sold in the U.K. each year, meaning that the subsidy will pay to electrify approximately 0.4 percent of one year's worth of new British cars. Given how early in the arc of electric vehicle adoption we are, 0.4 percent of the market isn't a terrible start. But if the funding is shut off after just 8,600 cars, can the market be expected to continue to survive and grow?
Luckily for EVs, recent political history indicates that periods of government enthusiasm for budget cuts are few and short-lived. If the U.K. wants to keep the Ford and Nissan factories that it recently granted £360 million and £20 million to, respectively, it may want to make sure there's a market for the vehicles they will be building.
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