Electric cars to get £100m aid

By John Reed in London
Published: October 28 2008 02:38

Britain’s hard-pressed car industry on Monday welcomed a £100m ($155m, €125m) pledge from the government to help develop electric and other ultra-low emission cars.
Geoff Hoon, transport secretary, outlined measures to fund the roll-out of plug-in vehicles and announced a shortlist of 10 companies that will compete to supply low-carbon vans to local councils and government bodies. The government will fund up to 100 electric vehicles to test how they operate in real-life driving conditions.

Mr Hoon also announced £20m for research and development in technology to make electric and other green cars more affordable. The high purchase price of electric cars – a function of their batteries – and the problem of recharging mean they are unlikely to find mass acceptance without an initial boost from government.
Global carmaking groups including Renault/Nissan, Daimler, General Motors and Mitsubishi plan to introduce plug-in electric or hybrid passenger cars from 2010-11. Daimler’s Smart brand and Toyota are road-testing prototype plug-in models in London.
Mr Hoon said the government had “committed to removing the barriers that could slow a changeover to greener motoring”.
Ford Motor, Mercedes-Benz, Citroen and Land Rover are among the companies that will compete to supply vans to public-sector bodies, such as the Royal Mail, and city councils including Glasgow, Leeds and Liverpool.
The Society of Motor Manufacturers and Traders, the industry lobby group, hon Monday welcomed the initiatives as “a significant step in supporting [carmakers’] investment in cleaner technology”. However, it urged the government “not to promote one specific technology as the answer”, noting the dramatic cuts in emissions achieved in new diesel cars.
The global economic slowdown has forced carmakers to cut shifts and slow production over the past month. As they adjust to collapsing sales, producers are pleading for government aid to fund development of low-emission cars. In the US, Detroit’s three crisis-ridden carmakers recently secured $25bn (£16bn) in low interest loans to retool their ageing plants to produce lower-emission models such as GM’s Chevrolet Volt, a plug-in car planned to launch in late 2010.
Carmakers are urging the European Union to offer a €40bn (£32bn) package of similar soft loans. Nicolas Sarkozy, the French president, this month said he would make €400m of public funds available to support the roll-out of electric vehicles.
In Britain, some car companies still think government could move faster to promote electric vehicles, citing more generous incentives in other EU countries such as Switzerland and France.
Copyright The Financial Times Limited 2008