Gordon Brown's electric car subsidy rejected by industry

• Automotive analyst calls offer 'pointless soundbite • Trade body says incentive unlikely to increase sales
Tim Webb
The Guardian, Friday 10 April 2009

The car industry has poured cold water on Gordon Brown's offer to provide a £2,000 subsidy to purchasers of electric cars - a move that one automotive analyst described as a "pointless soundbite".
Asked by the Guardian for details of the offer, a spokeswoman for Lord Mandelson's department of business said No 10 was taking the lead on the initiative. A No 10 spokeswoman said Mandelson's department had the details.
It was reported this week that the government was planning to offer the incentive to boost the sale of electric cars, helping the moribund British car industry become more environmentally friendly. Brown, it was reported, wants the UK to become a "world leader" in the production and export of electric cars.
But a spokeswoman for the trade body, the Society of Motor Manufacturers and Traders (SMMT), said the £2,000 subsidy would not have much effect on sales. A lack of charging points around the country limits the appeal of electric cars such as the G-Wiz, she said, while the choice of electric models on the market is limited. "We would welcome moves to encourage the take-up of any kind of low carbon technology," she added. "But purely having a scrappage scheme open to electric vehicles is not going to see a dramatic increase in sales."
The sale of electric cars in Britain more than halved last year, mainly because only small cars are on offer and because of safety fears. If the £2,000 subsidy had been in place, the government would have had to pay less than £500,000 to purchasers. There are only six companies in the UK that make electric cars and commercial vehicles or parts, employing only a few hundred people.
Paul Newton, analyst at IHS Global Insight, said the subsidy offer would not provide any immediate assistance to ailing British car makers, who have been savaged by the recession. "To offer £2,000 to potential buyers sounds great in theory but the fact there is a handful of small, almost backyard, manufacturers underlines the pointlessness of it," he said. "What the suppliers and the advanced technology companies need is something to keep them alive and put bread in their mouths today. If they disappear, the UK won't be able to benefit when electric cars become more commercially viable."
The government has repeatedly rebuffed requests to back the rescue of the van maker LDV, which wants to convert itself into an electric van manufacturer. Newton added: "If the government was serious about promoting the manufacture of electric vehicles in the UK, why did they refuse to support LDV?"
Car makers have slashed production, laid off thousands of workers and imposed wage cuts because of a collapse in sales. The SMMT wants the government to follow the example of other countries, such as Germany, and introduce a broadranging scrappage scheme whereby people who trade in their old cars get £2,000 off a new and more fuel-efficient model.
The government is reluctant to follow suit, despite the dramatic increase in sales in Germany. Mandelson told Sky News yesterday: "We're not in the business of bailing out the past."