Labour will subsidise EV loans to help drivers ditch petrol and diesel cars
The government has been tipped to intervene to boost electric car sales. The Labour Party government is mulling over plans to offer cheap or interest free loans on electric vehicles (EV) to drive up sales, as the number of motorists switching from petrol and diesel stalls.
The Financial Times suggested that ministers have considered introducing subsidies for electric car purchases by guaranteeing consumer loans. According to the Financial Times, the Government is currently in "private discussions" with various members of the auto finance sector to ramp up low-interest or interest-free loans to help make EVs more attractive.
One option being considered is underwriting private sector loans which would reduce the monthly repayments for drivers while also bringing down the initial costs for EV purchasing. Adrian Dally, motor finance director at the Finance and Leasing Association, said: "If there was a way where the Government could underwrite cheaper loans... that would be extremely helpful."
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He noted that the impact of the scheme and strain on public finances would depend on "how the UK decides to structure any support". A Department for Transport spokesperson added that 2024 was a "record year for switching to electric" with 382,000 EVs sold and the UK "investing over £2.3billion to support industry and consumers make the switch".
Data from New AutoMotive's Global Electric Vehicle Tracker (GEVT) shows that electric vehicle registrations around the world soared to more than 10.9 million in 2024. This represents a jump of six per cent, with a total of 650,000 more electric vehicles being sold across the globe throughout the last 12 months.
Ben Nelmes, CEO of New AutoMotive, said: "The market has spoken - the transition isn't coming; it’s already here. The real challenge for manufacturers is weaker than expected demand for petrol and diesel cars, as global sales nosedive.
"The numbers tell us that ambitious consumer targets will help European manufacturers out-compete Chinese firms more effectively than any tariffs can - whilst delivering big savings for buyers and improving the lives of people around the world."