Plug-in Car Grant reduced and £35,000 price cap introduced

 Published 19th March 2021
General Guides  Low Emission Vehicles 

The government has introduced changes to the Plug-in Car Grant with effect from 0700 on 18 March 2021.

The changes brought in by the Office of Zero Emission Vehicles (OZEV) may impact business drivers ordering electric vehicles.

The current Plug-in Car Grant was introduced 10 years ago to stimulate the early market for zero emission vehicles. The grant was reduced to £3,000 last year and an upper price cap of £50,000 introduced.

Now the Government has gone further and reduced the amount of the grant to £2,500 while making it unavailable to cars costing more than £35,000.

“This unexpected change will impact the decisions of some fleets to change to electric vehicles, particularly because it will make many non-qualifying cars more expensive, both in rental terms and in whole life costs,” commented Rob Marshall, Operations Director of Gateway2Lease.

“In particular it will exclude popular executive models, such as the Tesla Model 3 and the Polestar 2 from the grant, effectively making them £80 a month more expensive on a lease rental. It is also these vehicles which can travel furthest on a charge, so the change is regrettable.”

The Government explained its decision, saying it planned to target less expensive models to allow the scheme's funding to go further and to help more people make the switch to an electric vehicle.

Transport Minister Rachel Maclean, who announced the changes, 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. 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.”

Will my ordered car still get the grant?

Those cars that have been ordered and processed will receive the full grant pre-change.

There is also some leeway with orders that have been placed within the last 28 days but which have not yet been processed through the OZEV portal. As long as proof of order can be obtained, OZEV will honour the grant at the previous higher rate and qualifying criteria.

“Unfortunately for our customers that have electric vehicles on quotation but which have not passed to order status, then we will have to re-quote on those vehicles, whether they qualify for the grant or not,” added Marshall. “Of course we will be open to any questions that you may have about the vehicles that you have on order, so please do not hesitate to contact us.”

Changes to the Plug-in Van Grant

In addition to the Plug-in Car Grant changing, there were also changes to the Plug-in Van Grant, which may potentially affect commercial vehicle fleets or small business operators.

The new grant is available on 35% of the purchase price up to £3,000 for small vans below 2.5 tonnes GVW and 35% of the purchase price up to £6,000 for vans with a GVW between 2.5t-3.5t. Previously there was 20% of the purchase price available up to £8,000.

The eligibility criteria has also been changed. To qualify for the grant 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.

Previously the grant was available to those vans with CO2 emissions below 75g/km and which had the ability to travel at least 10 miles in zero emission mode; or if an electric van, a range of 60 miles.

“This change will affect those van operators who were considering the Ford Transit Custom PHEV, but which now falls outside the qualifying grant parameters,” said Marshall. “We will be happy to talk to our customers about alternatives that may be available and which satisfy the desired business outcomes.”

Do you need more help?

If you are affected by these changes, or think you may be, please do not hesitate to call us on 01299 407 360.

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