The market for electric cars and plug-in hybrids in the UK is small but growing and a major reason for this growth is the government’s plug-in car grant. From March 1st 2016, significant changes will be made to the way the plug-in grant is implemented so we’ve complied this guide to what the changes mean.
The Plug-in car grant offers individual full-electric and plug-in hybrid car buyers a fat chunk of taxpayer’s cash to subsidise their purchase. It means lower upfront prices for electric cars and hybrids that you can charge from the mains.
The Plug-in Car Grant was previously set at a generous £5,000 for all eligible vehicles, but changes to the scheme on March 1st 2016 could end up costing some buyers thousands.
How is the plug-in car grant changing?
The electric car subsidy is changing in three significant ways from March 1st 2016
1. From that date onwards, eligible cars will be banded into the following three categories:
- Category 1. Vehicles with a ‘zero-emission’ range of 70 miles, and CO2 emissions lower than 50g/km.
- Category 2. Vehicles with a ‘zero-emissions’ range between 10 and 69 miles, and CO2 emissions lower than 50g/km.
- Category 3. Vehicles with a ‘zero-emissions’ range of at least 20 miles, and CO2 emissions between 50-75g/km.
2. The maximum available grant is being cut from £5,000 to £4,500 for category 1 vehicles, but slashed from £5,000 to just £2,500 for category 2 and 3 vehicles.
3. A £60,000 ‘on the road’ price cap is also being introduced, so cars which are more expensive will not be eligible for the grant at all.
Plug-in car grant: winners and losers
The change means most full-electric cars will continue to receive the full (but lower) grant, but many plug-in hybrid vehicles in categories 2 and 3 will have their grants cut in half.
This includes the Mitsubishi Outlander PHEV – currently the UK’s best-selling low-emissions vehicle – which will be £2,500 more expensive after March 1st.
While it’s not good news for individual buyers of many of the most popular hybrids, the changes make sense if the government wants to target support where it’s needed most.
Full-electric cars like the Nissan Leaf and Renault Zoe would be significantly more expensive than equivalent petrol or diesel family hatchbacks and superminis were it not for the reduction in price provided by the plug-in car grant. They also suffer from very heavy depreciation, with the Nissan Leaf retaining only 20% of its value after three years/36,000 miles, so total running costs could become prohibitively expensive were it not for the grant.
• The fastest depreciating cars
The hybrids in category 2 and 3 tend to be larger cars so the cost of the advanced plug-in powertrains is a smaller proportion of the overall list price. It means that they’re more competitive against petrol and diesel alternatives. It’s a similar story on the residual value front where our latest figures suggest the category 2 Mitsubishi PHEV hybrid should keep up to 45 per cent of its value after three years/36,000 miles.
With small, all-electric category 1 cars offering far lower emissions than the large plug-in hybrids in categories 2 and 3, it’s understandable that the Government is looking to refocus the grant to incentivise more environmentally friendly buying decisions.
• Cars that hold their value best
So what’s the plug-in car grant change deadline?
The key date here is February 29th 2016, but that’s the deadline for claiming a plug-in car grant under the existing, more generous, terms – NOT the deadline for ordering your car.
How do I apply for a plug-in car grant?
The Plug-in Car Grant application is handled by the dealer you purchase your car from, so make sure you give them time to sort out the paperwork.
The scheme requires no paperwork to be completed by the purchaser (but you may be asked to complete a survey questionnaire) and the grant is deducted from the purchase price by the dealer so customers never have to pay the full list price.
Cars currently eligible for the plug-in car grant
This is the official list of cars eligible for Plug-In Grants – at the current rate of £5,000 for applications received up to February 29th, and the new lower rates by category after that date.
Category 1 Vehicles
• BMW i3
• BYD e6
• Citroen C-Zero
• Ford Focus Electric
• Kia Soul EV
• Mercedes-Benz B-Class Electric Drive
• Mitsubishi iMiEV
• Nissan e-NV200 5-seater and 7-seater
• Nissan LEAF
• Peugeot iON
• Renault Fluence
• Renault ZOE
• Smart fortwo electric drive
• Tesla Model S
• Toyota Mirai
• Volkswagen e-up!
• Volkswagen e-Golf
Category 2 Vehicles
• Audi A3 e-tron
• BMW i8*
• BMW 225xe
• BMW 330e
• Mercedes-Benz C350 e
• Mitsubishi Outlander PHEV
• Toyota Prius Plug-in
• Vauxhall Ampera
• Volkswagen Golf GTE
• Volvo V60 D6 Twin Engine
• Volvo XC90 T8 Twin Engine**
Category 3 Vehicles
• Mercedes-Benz S500 Hybrid*
• Porsche Panamera S E-Hybrid*
*The recommended retail price for these cars is above £60,000, so they will not be eligible for the plug-in car grant from 1 March 2016. However, they remain genuine ultra low emission vehicles.
**Variants with a recommended retail price over £60,000 will no longer be eligible for the plug-in car grant from 1 March 2016. Variants with a recommended retail price below £60,000 will remain eligible for the plug-in car grant from 1 March 2016, provided that the full purchase price (including number plates, vehicle excise duty and VAT) is also below £60,000.
Let us know what you think of the plug-in car grant changes in the comments section below...