Electric car subsidy program saved in Britain

When a new coalition government took power last May, Prime Minister David Cameron made it clear that cuts were needed to control Britain’s budget. Traditional areas like police and emergency services have been trimmed and the entire UK Film Council was shut down. A decision to scrap a subsidy program to encourage the purchase of electric and “low-carbon” cars was saved with a little help from Nissan and Mitsubishi.

The subsidy program was created by the Labour government in 2009, and promised a 25% subsidy up to £5,000 (about $7,800) for people that purchase electric, plug-in hybrid or hydrogen fuel cell cars. It was thought that the plan could not only help the country hit their carbon targets, but also generate green jobs in the manufacturing sector.

A coalition of car makers that included Nissan and Mitsubishi warned the government that cutting the subsidy program would make the UK a far less desirable place to make cars. Nissan had already picked a British site to start production of the Leaf in 2013, while other car makers were looking into cheaper sites outside of the UK. With the current economic climate, no country can really reject corporate investment that would create jobs. Rejecting the subsidy would also be a golden ticket for Labour and the manufacturing-minded UK Independence party in the next election.

Nissan also stepped in to combat the notions held by many members of the government about plug-in cars.
Some vocal conservatives attacked the plan because of the lack of charging stations in the country, with the now Chancellor of the Exchequer George Osbourne calling the plan a “fantasy.” Nissan presented data from its Japanese customers which found that they rely more on charging their car at home rather than using a public station.

At this point, the government reduced funding for the program from £230m ($361m) to £43m ($67m). The subsidy will start in January 2011 and run until March 2012. After that, the government will take another look at the program’s viability to see if this “fantasy” can become a reality.