The UK government is playing a high-stakes game with its electric vehicle policy, and its latest move—reintroducing a major subsidy—was a calculated gamble that has paid off spectacularly in the short term. The record sales of September are the winnings from this bet, but the risks of the game are still very much in play.
The gamble was that a significant financial incentive could overcome both consumer hesitancy and the industry’s struggles to meet its ZEV mandate targets. The government wagered that a subsidy would kickstart a sluggish market and accelerate the green transition. The bet was placed in July, and by September, it was clear they had a winning hand.
The jackpot was a nearly one-third increase in pure EV sales and a 56% surge in plug-in hybrids. This has put the government in a much stronger position regarding its 28% annual EV sales target and provided a welcome boost to the economy.
However, the game is not over, and there are still risks. The first risk is the creation of a bubble. The market could become so addicted to the subsidies that it cannot function without them, leading to a crash when the money runs out. The second risk is the cost, as the government is using a substantial amount of public money to fund this gamble.
The third and most subtle risk is that the gamble distracts from more fundamental issues, such as the weakening of the ZEV mandate’s “flexibilities.” The government may be winning big at the subsidy table, but it may be quietly losing chips in the more important game of long-term regulatory strength. For now, the house is up, but the final outcome is far from certain.