UK to Cut Subsidies for EVs; Tesla's (TSLA) Model 3 and Ford's (F) Mustang Mach-E No Longer Covered by the Grant Scheme

March 18, 2021 7:08 AM EDT

Get inside Wall Street with StreetInsider Premium. Claim your 1-week free trial here.

The UK is set to slash grants for electric vehicles (EVs) by £500 ($699) as the government looks to cut expenditures amid record stimulus packages unveiled to support the embattled economy.

The maximum available grant for a purchase of an EV will now fall from £3,000 to £2,500. This change won’t hurt Tesla (NASDAQ: TSLA) sales in the UK as much as the fact that the Government has downgraded the upper limit of eligible cars from £50,000 to £35,000.

Tesla’s popular Model 3, which is easily the country’s best-selling EV, will no longer be covered by the scheme as its starting price is set at £40,500. It has consistently been the country’s best-selling electric car over the past year.

The Times quoted a government source who said that "taxpayers should not be subsidizing people to buy £50,000 cars."

Industry experts are concerned these changes may deter customers from buying EV cars.

“Even though more models are coming on to the market, our research suggests upfront cost remains a concern to drivers when comparing the cost of an electric vehicle with a similarly sized conventional vehicle,” RAC head of roads policy Nicholas Lyes said.

“By cutting the grant, the Government may risk people holding on to their older, more polluting vehicles for longer.”

This is also not good news for people who already ordered, or are looking to order, a Ford (NYSE: F) Mustang Mach-E. The car is expected to hit the market soon, and the downgrade of the upper limit means it will join Tesla’s Model 3 in being ineligible for EV subsidies.

“This is not great news for those waiting for delivery of the stylish entry-level Ford Mustang Mach-E as they will find that the price has 'gone up' by £3,000. Many buyers would have been counting on the subsidy,” Edmund King, the AA president, told Daily Mail.

“On the other hand, most drivers knew that the 'free ride' wouldn't last for ever and at least more early adopters should be able to benefit from spreading the grant further.”

Serious News for Serious Traders! Try Premium Free!

You May Also Be Interested In

Related Categories

Corporate News

Related Entities

Tesla, Model 3