A French-style electric car leasing scheme could help to lift 500,000 people out of poverty, a think-tank has claimed.
The Social Market Foundation (SMF) urged ministers to take inspiration from France, which began trialling the move in December but had to suspend it in February due to huge demand.
Under the plan, the Government would subsidise a £100-a-month leasing scheme for poorer households so they can benefit from the cheaper running costs for electric vehicles (EV) compared to petrol and diesel vehicles.
Electric cars are more expensive than ordinary vehicles, at around £6,500 more for a used EV. But the more climate-friendly vehicles are cheaper to run, with lower maintenance costs.
Charging a medium-sized EV at home can cost around 8p a mile, compared to 13p-17p for a similar-sized petrol car, according to Government figures for January. Research by the Energy and Climate Intelligence Unit suggests EV drivers save around £700 a year.
It comes as high transport costs clobber household budgets, with around 5 million Brits pushed below the poverty line by their transport bill.
The SMF said that a targeted social leasing scheme could lift 500,000 people out of poverty, and more would see significantly reduced transport costs.
Senior Researcher Gideon Salutin said: “EVs can and will be a powerful tool to fight poverty and decrease emissions, but they remain out of reach for those who would benefit most. Instead of waiting years for EVs to achieve price parity with regular vehicles, the government must be proactive.
“By reducing upfront costs through a social leasing scheme, we can remain on track for our net zero goals, and help hard-pressed families. Still, it must be noted that EVs are not the only tool at our disposal to ensuring a just green transition.
“We also need more alternatives, and in particular to improve the availability, reliability and affordability of local public transport services.”
He argued that it would be cheaper for the Government than directly subsidising EVs through grants.