The new UK government has reduced the subsidy for electric cars scheduled to come into effect next year by about 80 per cent, from £230 million to £43 million in order to control the country's record budget deficit.
The electric car subsidy scheme announced by the previous Labour government, had proposed to allot £230 million, but the new coalition government under Prime Minister David Cameron had threatened to scrap it altogether saying that Britain could not afford this subsidy while facing a record deficit.
In fact, UK business secretary, Vince Cable had recently said that the government had no intention of supporting the British motor industry in order to rein in spending.
However, the UK government immediately came under pressure from electric car-makers, which argued that abandoning the scheme would halt the creation of green jobs and some manufacturers like Nissan had recently announced that had chosen the UK as among the centres for producing electric cars.
Relenting to the lobbying from the motor industry, the UK government trimmed the proposed allocation from £230 million to £43 million.
The business department said that it will initially allocate £43 million that will run between January 2011 and March 2012, and a review for further grants if required will be undertaken in January 2012.
Under the subsidy scheme, which is available to both private and business buyers, the government will pay up to 25 per cent of the electric car price, up to a maximum of £5,000 ($7,800/ €6,000).