The Government’s decision to cut the Plug-in Car Grant will have far-reaching consequences for consumers, the environment and industry, the Society of Motor Manufacturers and Traders (SMMT) has warned.

It says that “reducing the purchase incentives for zero-emission cars by a third and completely removing the grant for plug-in hybrids is totally at odds with the Government’s ambition to be the world leader in the take up of ultra-low-emission vehicles announced in its Road to Zero Strategy.

“It also sends yet more confusing signals to consumers and will make it virtually impossible for Government and industry to meet their CO₂ reduction targets.”

The SMMT also says that giving manufacturers and consumers a maximum of one month’s notice of a cap on volumes will result in yet more distortion to a market already impacted by previous conflicting Government policies — and put even greater pressure on industry.

“Manufacturers have already invested billions to bring a full range of new technologies to market, to give choice to consumers with different driving needs and budgets.

“Thanks to the Plug-in Car Grant, zero-emission-capable plug-in hybrids have become increasingly popular, but at less than 2.0%, the uptake is still very small.

“While the grant has helped incentivise 160,000 sales of plug-in hybrids over the past seven years, this represents less than 0.5% of the 34.7 million cars currently on the road.

“To grow zero-emission and ultra-low-emission vehicle uptake to the levels needed to make a meaningful impact on CO2 and air quality, consumers’ concerns over affordability and convenience must be addressed.

“As we’ve seen in other European markets, prematurely removing upfront purchase grants can have a devastating impact on demand.

“In Denmark, for example, sales of pure-electric cars plummeted by nearly 73% in the year after the government announced the end of its EV tax incentive — and the market has still not recovered.

“We understand the pressure on the public purse, but given the importance of environmental goals, it’s astounding that just three months after publishing its ambitious vision for a zero-emissions future, government has slashed the very incentive that offers our best chance of getting there.

“Industry is working hard to address the challenges of CO₂ and air quality, but while it can produce the technology, it cannot determine the pace of uptake.”