The end of the plug-in grant?

The end of the plug-in grant, the end of electric vehicles?

For many of us involved in the sale and leasing of new electric vehicles, the sudden changes in the Government’s plug-in grant for low emission vehicles was both surprising and shocking. As a business committed to the growth of EVs, our e-car lease team supply a number of vehicles which have historically enjoyed financial support from the Government. This added bonus has been a cherry on top for the transaction and has helped our business to grow into one of the leading electric car leasing specialists in the UK.

So what has changed with the EV grant? Why did the Government reduce the plug-in grant?

The support for EVs has been in place for a number of years (it was first introduced in 2011) to help both pure electric and plug-in hybrid electric vehicles grow in the UK. Indeed, one of the leading cars under the original grant was the Mitsubishi Outlander PHEV, which happened to be one of the first mass-market PHEVs in the UK.

The obvious issue was that a PHEV is not as environmentally friendly and sustainable as a pure EV. Additionally, it was apparent that some drivers of the infamous Outlander were using the vehicle and never charging it. For a PHEV to operate efficiently, this must be plugged into an external charging point, like a 3-pin plug point or an external car charger. However, the ability for many company car drivers to enjoyer lower BiK and company car tax exposure seemed more important than the notion of electrification. Some vehicles were returned to finance companies having never been charged whatsoever.

In response to this, and budgetary constraints, the original grant of a whopping £5,000 was reduced in phases to the £3,000 which we expected to be in place for the medium- to long-term. However, the Government had historically made some substantial changes already and this suggested that further cuts were always possible. One of the big changes was to remove the grant for PHEVs in 2018. In recognition of company car drivers using PHEVs to enjoy lower tax, the Government made a sensible decision to revoke their access to the grant. There was little debate that this was a sage decision on their part to create a more harmonious future.

And what about electric leasing on luxury company cars?

Furthermore, in 2019 the Government also noted that many pure EVs were “high value” like the Audi e-Tron, the Jaguar I-Pace, the Mercedes EQC plus the Tesla Model X and Model S. These vehicles had an RRP of anywhere between £60,000 – £100,000. With many more luxury EVs on route, the Government made further changes to exclude any EV which cost £50,000 or more.

In doing so, this removed the additional support for high-end and prestige EVs. Like the PHEV decision, this was a practical decision to make as those driving an expensive EV clearly had the ability to afford electric driving more easily than the average consumer. It is also clear that many directors and SMEs were about to enjoy the 0% BiK which came into effect in April 2020. The mass-market definitely required the support and luxury EVs have continued to grow notwithstanding the grant removal.

The change to a £3,000 grant for all vehicles below £50,000 seemed to many, or the e-car lease team at least, as something we could rely on for a few years. On the surface, this seemed to represent a realistic support level for EVs and would provide encouragement for those drivers who were researching an EV but who would otherwise be unable to afford one without support.

In the last year, our own business has been able to supply an array of EVs which benefited from the grant including the VW ID.3 and ID.4, the Ford Mustang Mach-e, the Nissan Leaf e+ and of course the UK’s bestselling EV, the Tesla Model 3 (Standard Plus and Long Range only). Contrary to popular belief, EVs are not just some “tax swizz” which enjoy almost no company car tax (1% BiK for 2021). These are genuinely great options for personal lease customers who want to benefit from enhanced whole of life costs, enjoy the fun of electric driving and contribute to a sustainable future.

Without a doubt the grant has allowed manufacturers to recoup some money for them to consider investment in battery production and new technology, while allowing customers on the cusp of EV ownership/usership, to make that transition.

Plug-in grant for electric vehicles: 2021 update

So what are the rules for 2021 for the plug-in grant on electric vehicles? The good news is that you can still get a discount on the price of brand new low-emission vehicles through a grant the Government gives to vehicle dealerships and manufacturers. To be clear, the consumer/business leasing vehicle does not need to do anything if they want to lease one of these vehicles - the leasing broker will organise the value of the grant in the vehicle’s monthly rental.

The new grant from mid-March 2021 is that the maximum grant available for cars is now £2,500. Not all low-emission vehicles will get a grant. Only vehicles that have been approved by the Government are eligible for a grant. To be eligible for the grant, cars must cost less than £35,000. This is the recommended retail price (RRP), and includes VAT and delivery fees.

To be clear, the grant will pay for 35% of the purchase price for these vehicles, up to a maximum of £2,500.

So what vehicles should I, or my business, consider for the new 2021 plug-in grant for electric vehicles?

The vehicles below are available on the Government’s website as eligible by virtue of their price. Additionally, these vehicles have CO2 emissions of less than 50g/km and can travel at least 112km (70 miles) without any emissions at all:

• Citroen ë-C4 – Sense Plus
• Citroen ë-C4 – Shine
• DS 3 Crossback E-Tense – Prestige
• DS 3 Crossback E-Tense – Performance Line
• Honda e
• Hyundai IONIQ Electric – Premium
• Hyundai KONA Electric (39kWh) – SE Connect
• Hyundai KONA Electric (39kWh) – Premium
• Kia e-Niro (39kWh) - 2
• Mazda MX-30
• MG MG5 EV
• MG ZS EV
• MINI Electric – Level 1
• MINI Electric – Level 2
• MINI Electric – Level 3
• Nissan e-NV200 (5 Seater) – Visia
• Nissan e-NV200 (7 Seater) – Visia
• Nissan Leaf (40kWh) – Acenta
• Nissan Leaf (40kWh) – N-Connecta
• Nissan Leaf (40kWh) – Tekna
• Peugeot e-208
• Peugeot e-2008 – Active Premium
• Peugeot e-2008 – Allure
• Renault ZOE
• SEAT Mii electric
• Skoda Citigo-e iV
• Skoda ENYAQ iV 60 Nav – Loft
• Skoda ENYAQ iV 60 Nav – Lodge
• Smart EQ fortwo
• Smart EQ forfour
• Vauxhall Corsa-e
• Vauxhall Mokka-e – SE Nav Premium
• Volkswagen e-Golf
• Volkswagen e-up!
• Volkswagen ID.3 Pro (58kWh 145PS) – Life
• Volkswagen ID.3 Pro Performance (58kWh 204PS) – Life

Will the grant be reversed?

In an ideal world, the Government should have taken into consideration factors other than the vehicle’s price. For example, the Government could have used metrics like battery efficiency, vehicle range or charging times, which could help promote the most efficient and practical vehicle on the UK roads to continue to sell/lease.

Setting a grant by sheer RRP alone is both short-sighted and contradictory; the Government has been clear in its ambition to push the UK into pure EVs by 2030. How can this be achieved? By allowing the consumer/business to enjoy the best EVs which manufacturers can produce. Punishing those manufacturers with the bigger/more-efficient batteries is a somewhat ignorant policy. And not one which e-car lease support. While we appreciate the COVID-19 situation has placed immeasurable demands on our budgets, surely a sustainable and long-term environmental future must feature as a key part of the agenda?

Of course, a big thank you to our business customer from Gosport (Hampshire) for sending photos of their brand new Tesla on business lease.

Tesla Model 3 SALOON Long Range AWD 4dr [Auto]

In terms of the car shown, the Tesla Model 3 SALOON Long Range AWD 4dr [Auto] [Pure Electric Vehicle], this is based on the following configuration:

• Multi coat Paint
• Premium material - Black PUR seat
• 18" Aero Wheels

As standard the car includes automatic emergency braking/collision avoidance, ESP, mobile telephone preparation, adaptive cruise control, adaptive steering, front/rear parking sensor, lane departure warning, park assist camera, traffic sign recognition, power boot lid, BLIUS, auto-dimming power folding and heated door mirrors.

15” touchscreen, DAB radio, premium audio with 14 speakers/1subwoofer/2 amps, LED headlights, LED daytime running lights, matt black interior trim, heated front and rear seats, 12-way power adjustable seats, keyless entry, immobiliser and alarm. In terms of additional upgrades on the Model 3 consider adding - enhanced autopilot/19” silver sport wheels or the black/white trims.

On the technical side, company car and business users can note the P11d at £50,935.00 and CO2 at 0g/km. The usable battery of 70kWh offers a winter range of around 235 miles and a summer range of around 330 miles. On the performance, the Model 3 LR will accelerate in 4.4 seconds for 0-62, achieve 145mph and offer drivers around 434hp.

In terms of charging, expect a 7.4kW home charger to get 0-100% in around 7-8 hours or use a 50kW DC rapid charger to get 10-80% in 69 minutes. Alternatively, a Tesla supercharger will get the same in just over 30 minutes!

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