THE Government has announced today (18 March 2021) that it is cutting the amount of money available for the Plug-in Car Grant.
The amount of grant is being reduced by £500 to £2500 and it is now only available to cars with a list price of £35,000 or below.
Previously the grant had been available to cars up to a list price of £50,000, which included vehicles such as the Tesla Model 3 (for example the Long Range model at £49,990) and the recently launched Polestar 2 (list price £49,900).
Over a three year lease, this will add more than £80 a month to the vehicle rental of such electric cars, a fact noted by Paulo Luckman, Head Of Fleet Consultancy at Hitachi Capital Vehicle Solutions:
The Plug-in Car Grant changes in detail are:
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Value of grant is reduced from 35% of purchase price up to £3000 to 35% of purchase price up to £2500.
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The eligibility criteria of cars is changed from less than £50,000 to cars costing less than £35,000.
The changes to the grant are effective immediately, although orders logged in the system inthe previous 28 days will be honoured at the old rate.
The Government said that it wanted to ensure its grant, which was introduced 10 years ago, was spent with the greatest effect.
Transport Minister Rachel Maclean said:
“We want as many people as possible to be able to make the switch to electric vehicles as we look to reduce our carbon emissions, strive towards our net-zero ambitions and level up right across the UK.
“The increasing choice of new vehicles, growing demand from customers and rapidly rising number of chargepoints mean that, while the level of funding remains as high as ever, given soaring demand, we are refocusing our vehicle grants on the more affordable zero emission vehicles – where most consumers will be looking and where taxpayers’ money will make more of a difference.
“We will continue to review the grant as the market grows.”
Maclean added that by taking the funding reduction now, it would make the grant available for longer and tom more drivers.
“Grants will no longer be available for higher-priced vehicles, typically bought by drivers who can afford to switch without a subsidy from taxpayers,” she added.
The number of electric car models priced under £35,000 has increased by almost 50% since 2019 and more than half the models currently on the market will still be eligible for the grant, the Government said.
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“Generous tax incentives, including favourable company car tax rates, which can save drivers over £2,000 a year, will remain in place.”
Ford Transit Custom PHEV – no longer qualifies for the grant
Plug-in Van Grant Changed
The grant changes did not just affect electric cars, but were also extended to light commercial vehicles. In much the same way that the Plug-in Car Grant has affected the Tesla Model 3 and Polestar 2, the van changes will also affect the Ford Transit Custom PHEV which will no longer be eligible since its zero emission range is outside the
The Plug-in Van Grant changes in detail are:
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Previously 20% of the purchase price was available up to £8000. This has now been changed to 35% of the purchase price up to £3000 for small vans below 2.5 tonnes GVW; and 35% of the purchase price up to £6000 for vans with a GVW between 2.5t-3.5t.
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The eligibility criteria has also changed. Previously qualifying vans were those with CO2 emissions below 75g/km with the ability to travel at least 10 miles in zero emission mode; or if an electric van, must have a range of 60 miles. To qualify now, vans must have CO2 emissions of 60g/km or less and must be able to travel a minimum of 60 miles with zero emissions.
Gerry Keaney, Chief Executive of the British Vehicle Rental And Leasing Association, commented:
“This will come as a particular blow for the commercial vehicle sector, where BVRLA members have been working so hard to drive uptake of electric vans and trucks. Coming just months before the COP 26 summit and as other countries are increasing their zero emission subsidies, this move could also have a big impact on the supply of electric vehicles coming into the UK.”
The plug-in vehicle grant scheme was renewed last year, with £582 million of funding intended to last until 2022-23 the government added.
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