Electric car prices could rocket by up to £5,000 after a new report revealed only 1,052 electric cars have been bought using the government's plug-in car grant at a cost of £11m to the taxpayer.
This, says the Transport Select Committee, the organisation behind the report, means the grant is simply subsidising electric cars for affluent households and not helping the new technology achieve widespread popularity.
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If the Transport Select Committee's report leads to the grant being scrapped, it could mean the Nissan Leaf, the UK's pin-up electric car, could cost £30,000 for a new model.
The recently-launched report by the committee focuses on the government's current plug-in vehicle strategy, and heavy underlines how low consumer demand for plug-in vehicles currently is on the marketplace.
It also says the grant, which offers £5,000 off the cost of a plug-in car to consumers, isn't proving effective, with Committee Chair Louise Ellman MP blasting the scheme which was introduced in January 2011.
"So far, Department for Transport expenditure on plug-in cars - some £11 million - has benefited just a handful of motorists. We were warned of the risk that the Government is subsidising second cars for affluent households; currently plug-in cars are mostly being purchased as second cars for town driving.
"It is also unclear whether the provision of public charging infrastructure encourages demand for plug-in cars. Indeed, the Government does not even have a register of all the chargepoints installed at public expense."
Electric cars have struggled to take off in the UK because of perceived high prices and worries over range anxiety. When the Mitsubishi i-MiEV was launched, an initial price of nearly £35,000 was lowered drastically amid outcry over the high price of the four-seat city car.
Meanwhile, Peugeot and Citroen recently announced they would be halting production of the near-identical iOn and C-Zero respectively after low take-up of the cars. The cost of leasing a C-Zero, which was originally nearly £500 per month, has almost halved to around £260 per month for business leasing customers.
The news could also affect a new range of affordable electric cars such as the £13,000 Renault Zoe supermini, a Clio-size supermini that could see its prices rise to £18,000 if the grant is scrapped.
The grant was introduced to help the UK cut its C02 levels by 2015, after the Commons Select Committee claimed that over 90% of the UK's domestic transport emissions come from road transport.
The report throws the future of the electric car grant into serious doubt, with the Transport Select Committee recommending that the government set milestones for the number of plug-in cars sold during its next spending review to ascertain the grant's success.
The Committee also recommends that the Department for Transport needs to evaluate chargepoint infrastructure across the UK, and whether the current setup encourages consumers to invest in an electric car.
The Committee wants an accurate and comprehensive registry of chargepoints installed by the Plugged-In Places scheme made available over the next six months, to give private chargepoint providers encouragement to upload their data for public use.
The Committee also calls on greater government consistency between departments where the grant is concerned, and wants the Department for Transport should clarify the reasons for the under spend in its low carbon vehicle programme.
Written by John Meadowcroft