Industry reaction to plug-in grant changes

The plug-in car and van grant rates have been cut by the Government with the eligibility criteria also changed. Transport + Energy has all the industry reaction.

The grant, which had given consumers 35% off the purchase price of an electric vehicle (EV) up to a maximum of £2,500, has been cut by £1,000 to £1,500. This means that from today (15 December 2021) the government will provide grants of up to £1,500 for electric cars priced under £32,000, with currently around 20 models on the market.

The plug-in grant scheme, which has supported nearly half a million vehicles over a decade, has helped kickstart a market that is now moving forward at pace with over one in 10 cars sold in 2021 – over 150,000 – having a plug. 

Support for wheelchair accessible vehicles is being prioritised, with these retaining the £2,500 grant and a higher £35,000 price cap.

Grant rates for the Plug in Van Grant will now be £5,000 for large vans and £2,500 for small vans, with a limit of 1,000 per customer per year.

Motorcycle and moped grants will also be changing, with the government now providing £500 off the cost of a motorcycle, and £150 for mopeds, with a price cap on vehicles of £10,000. Almost 50% of mopeds sold this year were battery electric, with some models now at price parity with their internal combustion engine equivalent. 

Meanwhile the government is also setting out that it will introduce new rules next year that they say “will increase confidence in EV charging infrastructure”. These rules will mandate a minimum payment method – such as contactless payment – for new 7.1 kW and above chargepoints, including rapids. Motorists will soon be able to compare costs across networks which will be in a recognisable format similar to pence per litre for fuel and there will be new standards to ensure reliable charging for electric vehicle drivers.

Transport Minister Trudy Harrison said: “The market is charging ahead in the switch to electric vehicles. This, together with the increasing choice of new vehicles and growing demand from customers, means that we are refocusing our vehicle grants on the more affordable vehicles and reducing grant rates to allow more people to benefit, and enable taxpayers’ money to go further.

“We want as many people as possible to be able to make the switch to an electric vehicle, which is why we will also be introducing new rules to make it easier to find and pay at chargepoints. This will ensure drivers have confidence in our charging infrastructure, as we look to reduce our carbon emissions, create green jobs and level up right across the UK.”

Industry reaction:

Gill Nowell, Head of EV, LV= General Insurance, said: “Whilst it’s good that financial support is being targeted at the most affordable electric cars, a £1,000 cut to existing grant, at a time when living costs are rising, still creates a massive financial barrier for people considering the switch to a green car – it’s like robbing Peter to pay Paul.

“Our research shows that almost half of drivers are put off buying an electric car due to the relatively high upfront sticker price. In the current environment of increased living costs, the government should focus fiscal support on making all electric cars affordable, and helping people understand the running costs – one thing that we are doing through ElectriX – which can in fact make electric cars better value over the lifetime of owning the vehicle.”

Mike Hawes, SMMT Chief Executive, said: “Slashing the grants for electric vehicles once again is a blow to customers looking to make the switch and couldn’t come at a worse time, with inflation at a ten-year high and pandemic-related economic uncertainty looming large.

“Industry and government ambition for decarbonised road transport is high, and manufacturers are delivering ever more products with ever better performance. But we need to move the market even faster – from one in a hundred cars on the road being electric, to potentially one in three in just eight years – which means we should be doubling down on incentives. Other global markets are already doing so whereas we are cutting, expecting the industry to subsidise the transition, and putting up prices for customers. UK drivers risk being left behind on the transition to zero-emission motoring.”

Denise Beedell, Public Policy Manager at Logistics UK, comments: “We are disappointed to see reductions for plug-in van grants being brought in without notice and less than a year since the previous plug-in grant rate reduction. Reducing financial support at this time is unhelpful for a sector that is already working hard to decarbonise, while handling significant supply chain and cost pressures. Logistics businesses are determined to move to low and zero tailpipe emissions vans as swiftly and effectively as they can, but the decision to reduce the grants for electric vans under 3.5 tonnes will be detrimental to this transition; we are, however, pleased to see that the grants for larger vehicles (those over 3.5 tonnes) will remain the same.”

Image courtesy of Shutterstock.

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