Government grants alone will not create the green revolution ministers want to see in the car market, says the RAC Foundation.
Limited subsidies of up to £5,000 for purchasers of ultra-low carbon vehicles (ULCVs) are welcome but need to be followed by more radical incentives such as a so-called feebate system under which purchasers of the greenest cars get a significant rebate, while buyers of gas-guzzlers pay an extra fee over and above the showroom price.
The aim is to make the scheme revenue-neutral to the Government and so also the taxpayer.
Such a scheme is already in place in some other European countries including France.
Much more also needs to be done to allay drivers’ fears over range, reliability, battery life and residual value.
These are amongst the conclusions of a report by academic and consultant Ben Lane, published today by the RAC Foundation.
The report puts forward evidence that showroom incentives, rather than reduced rates of so-called circulation taxes like VED, will be critical to persuading drivers to buy the new generation of green vehicles which are currently – and in the short to medium term are expected to remain – much more expensive then equivalent petrol and diesel models.
For example the new Nissan Leaf and Mitsubishi iMiEV will still cost around £24,000 – after taking into account the £5,000 grant – while the greenest Ford Focus ECOnetic diesel car is in the showrooms at about £17,000.
Professor Stephen Glaister, director of the RAC Foundation, said:“However we cannot avoid the thorny issue of price.
"While the current subsidies are welcome they are only a start.
"The battle to bring down prices could be a long and difficult one, especially if we are to achieve the recommendation from the Committee on Climate Change of getting 1.7 million plug-in electric vehicles on the road by 2020.
"In the meantime consumers need to be reminded that many of the current range of hybrids, petrol and diesel engine come with serious green credentials.”