Subsidies to Electric Vehicles – Are They Justified?

Tesla Model 3

There was a good article in the Investors Chronicle last week covering the subsidies to electric vehicle manufacturers from the Government, particularly to Tesla.

In 2020 the Department of Transport paid out at least £61.5 million lowering the price of new Tesla vehicles to the purchasers. Since 2011 the government has spent at least £1.1 billion by providing up to £2,500 per vehicle to manufacturers of electric cars. Tesla has been the biggest recipient of this largesse.

But with the price cap on which vehicles qualify being reduced to £35,000 when the cheapest Tesla is the Model 3 from about £40,000, this subsidy is likely to disappear unless Tesla reduce their prices which they seem unlikely to do.

Are such subsidies justifiable? Effectively the Government is using the taxes you pay to subsidise the purchase of expensive vehicles which only wealthier people can afford to buy. Introducing a lower price cap certainly makes sense, but it is surely questionable whether such subsidies should be paid at all when the Government is so short of money as a result of the Covid epidemic..


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1 thought on “Subsidies to Electric Vehicles – Are They Justified?

  1. 40k for a milk float seems a bit steep. If the government really wants to help climate they should subsidise cheaper cars so the poor can get rid of their old diesels which they encouraged them to purchase in the first place!

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