I'm curious to know what others think of this.
I'm personally for keeping it as I see the benefit coming in a few years having many more EV's available in the second hand market. Currently it's pretty much dominated by mainly Nissan Leaf's at the lower end of the secondhand market.
I know of a few people as well who have bought EV/Hybrids recently that would not have even considered going for EV's or even hybrids without the rebate.
You are right, it's what people want.
The way to incentivise smaller vehicles (and less private vehicle travel generally) is through RUC and congestion charges. If we paid for road usage based on weight/footprint the demand for bigger cars wouldn't be so high.
If we had price rationing at peak times (commute, school run etc.) then people would be incentivised to pool, use alternatives, etc.
The emissions from building more roads and parking spaces is non-trivial too.