Finding a fairer and more effective model for supporting the Electric Vehicle market - how Motability could help

The UK Government confirmed today its £650 million Electric Car Grant (ECG) scheme, which will provide subsidies of up to £3,750 to buyers of new electric cars priced up to £37,000

Although supported by the SMMT and others, the grant is controversial (see the Times op-ed here, for example).

Is it enough to turn non-buyers into buyers? Will it merely shift some buyers from 'nearly-new' cars (e.g. demonstration or pre-reg cars) to brand new? Will it result in lower manufacturer discounts than would have applied otherwise? Even with the price cap of £37,000, will the scheme benefit mainly better-off households?

Most fundamentally perhaps, it's not obvious how this addresses what has become the biggest barrier to buying new Electric Vehicles, being the high depreciation caused by the lack of demand for used EVs.

There could be a fairer and more effective solution. Ironically it might come from building on the Motability scheme, despite recent controversy over some aspects of that. Here's how it could work:

🔷 A new version of Motability is created limited to used EVs including hybrids

🔷 Eligibility is restricted based on either medical conditions (as today) or household income (new criteria)

🔷 Like Motability, no VAT on lease payments

🔷 For users eligible for Government Mobility Allowances, these may be used as normal (noting this is not an additional subsidy - the amounts would be paid anyway)

🔷 For all users (i.e. including those with low household income) a modest grant - perhaps £1,000 - will be paid upfront resulting in lower lease payments

🔷 Interest rates - where applicable - would be capped

🔷 Arrangements for administering the grants could mirror those successfully applied to the Clean Air Zone replacement vehicle schemes to check eligibility and avoid fraud

Supporting the used car market in this way should not only bring key societal benefits - helping struggling families to obtain vital mobility at an affordable monthly cost - but also strengthen the used car EV market, making the decision to invest in new cars for those who can afford that option more attractive.

This is a one-off opportunity while used EV prices are so low, and it could operate alongside the newly announced ECG.