Are Electric Vehicles going to lose the Plug-In Grant?

Are Electric Vehicles going to lose the Plug-In Grant?

As part of encouraging UK automotive customers to make a greener vehicle choice, the Government put in place a grant to support the price of the vehicles – a list of Low-emission vehicles eligible for a plug-in grant are set out on their website at . This support scheme has been in place for some time (it was set up in 2011) and was originally a generous £5000 to assist ultra-low emission cars.

To be clear, this included pure electric and PHEVs. With a shortage of vehicle options, there were only so many vehicles which qualified for this grant initially, so cars like the Mitsubishi Outlander PHEV received the same support. In 2018, the grant was changed to support zero emission vehicles only i.e. pure electric cars. These are vehicles which do not produce any emissions from their tailpipe which means there must be no combustion engine present. Over 200,000 vehicles have enjoyed this support, so it has very much assisted in the EV-revolution.

The plug-in grant is not a rebate paid to the customer – we sometimes get asked by customers “when do I get my plug-in grant money?” To be clear this is included within the vehicle’s OTR price, so will be reflected in the price you pay per month on your leasing contract. From March 2021, the value of the grant, and cars which qualified for the grant, changed quite substantially. The figure was reduced to £2500 (from the previous £3000) and only cars below £35,000 qualified for the grant.

By “price” this means the vehicle including Vat, including any mandatory extra specification, battery costs and delivery charges / admin charges (but not the discounts, FRF, warranty or service packages or non-standard options). Where a vehicle model has a price range which is above and below £35,000 only those variants/trim levels priced below the cap will be eligible for the grant.

Variants or trim levels of eligible vehicles which are priced above the price cap are not eligible for the grant. Effectively, the Government are supporting more cost-effective vehicles which are likely to be used by an average consumer, as opposed to the luxury and high-end models which you will have seen across the EV sector. AS we move to the mass-adoption of electric cars, support is needed for the affordable and budget options.

So will the EV grant be in place after 2021? The obvious fact is that EVs are growing considerably in popularity. As the SMMT reported  some 11,000+ pure electric/battery electric vehicles were registered in July 2021. Within those vehicles, many would have been priced below the £35,000 threshold, so will have qualified for the grant. While there are suggestions of the grant being in place longer; in their Transition to zero emission cars and vans report, the Government stated –  Commitment: We will continue to fund the plug-in car grant until at least 2022/23. However, there is a clear message that this will be placed under regular review and grants can change at any time. With increasing demand for EVs, which are now more readily available and cost-effective, the likelihood on a plug-in grant beyond 2022 is seemingly low. Or the threshold / qualification is likely to change.

What if my car is delayed by the ongoing semi-conductor issues? 

But what if my EV is delayed by the semi-conductor issues? Can you lose the grant for a vehicle delay? To help customers, OZEV have produced an explanatory letter (set out below) which recognised the obvious issues caused by the automotive industry challenges on parts:

• Orders placed on the Plug in Grant Portal within the 9 months prior to 5 August 2021 will be allowed an additional 3 months, therefore a total of 12 months, to reach ‘awaiting payment’, ‘awaiting audit’ or ‘completed’ status on the portal. The extended 12 month limit will apply to any order added to the portal on or after 5 November 2020.
• We will continue to allow 12 months for new orders placed on the portal for a 6 month period. This period will end at 23:59pm on 4 February 2022. We may consider further extensions to the 12 month period depending on the state of the market at this point.

This is a positive move by OZEV which recognises the ongoing issues our industry face. As the UK’s leading electric car leasing experts, we need the ability to instil confidence in our personal and business leasing customers. When a vehicle is on order for 3/6/9 months, the prospect of losing the £2500 grant support is somewhat sizeable and can often be the difference between a customer affording their new electric car or not. Government support for this is essentially for the EV transition to work properly.