SME fleets looking to electrify their company cars have just seen the Government wipe £1000 off the value of the Plug-in Car Grant (PICG) today (15 December, 2021).
The changes take place with immediate effect and reduce the amount of grant available from from £2500 to £1500 up to 35% of the recommended retail price inclusive of VAT and delivery fees. It is the second time this year that the Government has reduced its level of support for electric cars.
The Government has also reduced the qualifying grant level from under £35,000 to below £32,000, saying there were 20 cars that currently met this criteria (see list below).
As a result SME fleets that have not placed their orders will see average car leases rise by £70 a month as a result.
Richard Jones, Managing Director at the UK’s largest leasing company, Lex Autolease, said:
As the uptake in electric vehicles continues to accelerate the UK’s journey to net zero, we understand that policymakers will need to continuously review the grants available. However, the announcement made today to reduce grants from £35,000 to £32,000 will impact around 60% of the vehicles available in the market increasing rentals on new orders on a 36 month agreement by around £70 a month overnight. We hope that Government departments and industry bodies continue to work together to maximise the opportunities to encourage EV uptake and reassure manufacturers that the UK is leading the EV charge.
Announcing the changes, the Government said:
The government’s approach to supporting the uptake of electric cars is clearly working – while the grant has slowly reduced over time, the sales of electric vehicles have soared. Record sales in 2021 have already exceeded those from 2019 and 2020 combined.
The Government also pointed out that fleets were assisted with generous company car tax allowances that were worth up to £2000 a year to company car drivers.
The Plug-in Car Grant changes in detail
Old grant value
- 35% of purchase price, up to £2,500
New grant value
- 35% of purchase price, up to £1,500
- Cars must cost less than £32,000 – previously £35,000.
Lee Jones – the Managing Director of FleetProcure, an online vehicle purchasing system for leasing brokers and fleet supply dealers, commented:
The change has been rumoured for the past few weeks and is therefore not entirely surprising. EV leasing has grown substantially this year with more vehicle choice and lower price entry points. What remains to be seen in the current vehicle supply issues climate is whether the car makers will again look to lower their vehicle pricing to counteract these changes, as happened the last time the grant was reduced.
Changes introduced to Plug-in Van Grant
While the level of grant support for fleet electric vehicles was always going to reduce, somewhat surprisingly the Government also chose to reduce the level of grant support for electric vans (eLCVs).
Old grant value
- 35% of purchase price up to £3,000 for small vans up to 2.5 tonnes gross vehicle weight (t GVW)
- 35% of purchase price up to £6,000 for large vans between 2.5-3.5t GVW
New grant value
- 35% of purchase price up to £2,500 for small vans < 2.5 tonnes gross vehicle weight (t GVW)
- 35% of purchase price up to £5,000 for large vans 2.5-3.5t GVW
The British Vehicle Rental & Leasing Association (BVRLA) was highly critical of the changes, its Chief Executive, Gerry Keaney, saying:
While we’ve seen high levels of grant uptake within the car market, the situation is not the same for electric vans. The disparity across the industry means that sweeping solutions are not suitable. Incentives have had a positive impact to date but there is more to be done. It is disappointing to see support declining when cost remains a crucial stumbling block.
The Government defended the changes, adding:
This will enable a more sustainable grant scheme and will ensure that taxpayers’ money is distributed more fairly across businesses seeking to transition their vehicles to zero emission. Plug in Van Grant orders in 2021 are already over 250% higher than in 2020, demonstrating the strong shift to an electric future.
More information on the Plug-in Car And Van Grants
Read this (opens in new tab): Government funding targeted at more affordable zero-emission vehicles as market charges ahead in shift towards an electric future
Which Cars Are Eligible For The Plug-in Car Grant?
At the time of writing (15 December 2021), the following list of cars met the new grant criteria.
- Fiat 500e – Action
- Fiat 500e – Icon
- Fiat 500e – La Prima
- Fiat 500e Convertible – Icon
- Honda e – Standard
- Hyundai KONA Electric (39kWh) – SE Connect
- Hyundai KONA Electric (39kWh) – Premium
- Mazda MX-30 – SE-L Lux
- Mazda MX-30 – First Edition
- Mazda MX-30 – Sport Lux
- MG MG5 EV (52.5kWh)
- MG MG5 EV (61.1kWh)
- MG ZS EV – SE
- MG ZS EV – Trophy
- MG ZS EV – Trophy Connect
- MG ZS EV – SE Long Range
- MINI Electric – Level 1
- MINI Electric – Level 2
- Nissan e-NV200 (5 Seater) – Visia
- Nissan e-NV200 (7 Seater) – Visia
- Nissan Leaf – (40kWh) – Acenta
- Nissan Leaf (40kWh) – N-Connecta
- Peugeot e-208 – Active Premium
- Peugeot e-208 – Allure Premium
- Renault ZOE – i Play R110 Z.E 50
- Smart EQ fortwo
- Smart EQ forfour
- SsangYong Korando eMotion – Ventura
- Vauxhall Corsa-e – SE Nav Premium
- Vauxhall Corsa-e – SRi Nav Premium
- Volkswagen e-up!
- Volkswagen ID.3 Pro (58kWh 145PS) – Life
- Volkswagen ID.3 Pure Performance (45kWh 150PS) – Life