The motor industry has described as "shocking" and "deplorable" a decision by the Government to remove the €2,500 grant for plug-in hybrid electric vehicles.

It follows the announcement yesterday by the Department of Transport that the grant is to disappear from 1 January 2022, as part of changes being made to State supports for the electric vehicle sector.

It means that anyone who has pre-ordered a PHEV for next year will no longer be able to avail of the grant, pushing the cash price they will have to pay up by €2,500.

In a statement, the Society for the Irish Motor Industry said the timing was deplorable as it would give no notice to retailers, manufacturer and finance companies that have contracts for these vehicles.

SIMI also said it would have the effect of undermining the aim of reducing emissions from the national car fleet.

"This is a terrible decision, which is anti-consumer and anti-environment, only adding to the cost for the customer making a better environmental decision," said Director General of SIMI, Brian Cooke.

"PHEVs are an important stepping-stone to going fully electric, particularly in parts of rural Ireland where this is a lack of charging infrastructure. For the first quarter of next year PHEVs have been ordered well in advance of the Budget," he added.

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The Department of Transport has said PHEVs will continue to attract supports including home charger grants and reduced tolls.

However, the existing grant will only now apply to vehicles that are delivered, registered and taxed before the end of the year, unless delivery has been delayed due to the global semiconductor shortage.

In such a case, the availability of the grant will be extended out to March 31.

SIMI said the change also follows an increase in VRT announced in last week's budget and comes after the PHEV grant was cut in July from €5,000 to €2,500.

So far this year, 7,658 PHEV cars have been sold and the sector is expecting sales of around 11,000 next year.

"It is essential that the existing basket of Electric Vehicle (EV) and Plug-In Hybrid Electric Vehicle (PHEV) incentives be maintained, until we see the dial moving towards mass adoption over the next 10 years," Mr Cooke said.

"With major delays in the supply of new vehicles, it will be impossible to get these vehicles into the country before December and in any event most customers have ordered in anticipation of a new 2022 car," he said.

"The lack of understanding of both the motor vehicle supply chain and customer behaviour in ordering vehicles for the start of the following year will lead to huge financial and logistical problems for manufacturers, retailers and customers, as we emerge from a year that completely destabilised the Industry with Covid and Brexit," he added.

The Department of Transport said €100m of grant aid and supports for EVs will be provided over the course of 2022, almost double the level of funding in 2021.