Government reduces Plug-in Car Grant

General Guides  Low Emission Vehicles 

THE Government has reduced the amount and qualifying criteria of the Plug-in Car Grant (PICG) with immediate effect (15 December, 2021).

The grant reduction will affect both business drivers and consumers who are thinking of switching to an electric car.

The changes reduce the amount of grant available from £2500 to £1500 up to a maximum of 35% of the recommended retail price inclusive of VAT and delivery fees.

The qualifying criteria has also been reduced from £35,000 down to £32,000 recommended retail price. The Government says that there are 20 cars that meet this criteria. When the qualifying cost of the grant was reduced in March 2021 , many car makers lowered their price lists to ensure continued eligibility for the grant, although there is no guarantee this will happen again.

With pure electric cars running at 10% of the total car market, the Government says its approach to supporting the uptake of electric cars is working, pointing out that while the grant has slowly reduced over time, the sales of electric vehicles have soared. Registrations in 2021 have already exceeded the combined EV sales of 2019 and 2020.

What are the Plug-in Car Grant changes?

Old grant: 35% of purchase price, up to £2500
New grant: 35% of purchase price, up to £1,500

To qualify cars must cost less than £32,000 (previously £35,000). This is the recommended retail price (RRP), and includes VAT and delivery fees.

Reduction in the Plug-in Van Grant, too

The Government has been less severe in its grant reduction on electric commercial vans , but has still reduced the support available to companies planning to switch their fleets to electric.

The details are below:

Old van grant

- 35% of purchase price up to £3000 for small vans < 2.5 tonnes gross vehicle weight (t GVW)

- 35% of purchase price up to £6000 for large vans 2.5-3.5t GVW

New van grant

- 35% of purchase price up to £2500 for small vans < 2.5 tonnes gross vehicle weight (t GVW)

- 35% of purchase price up to £5000 for large vans 2.5-3.5t GVW

The Government said the changes to the Plug-in Van Grant “would enable a more sustainable grant scheme and will ensure that taxpayers' money is distributed more fairly across businesses seeking to transition their vehicles to zero emission.”

It said that 2021 Plug in Van Grant orders were already greater than 250% higher than in 2020, in what it said was a strong shift to an electric future.

“We had heard rumours for a few weeks that a change to the value of the grant was likely, and the Office for Zero Emission Vehicles (OZEV) has said often that the pot of money for electric car grants was limited,” commented Rob Marshall, Operations Director at Gateway2Lease.

“Nevertheless, it comes as a real blow to those businesses and consumers trying to do the right thing for the environment and go electric when new car availability remains extremely tight.

“It goes without saying that we will continue to help our customers make the electric transition, especially at this moment when I'm sure there will be lots of questions. We will endeavour to address those questions as best we can and help you into an electric vehicle lease.”

Do you have any questions regarding the grant cuts?

Please don't hesitate to get in touch with one of our leasing executives who will be able to advise you on your options. Call: 01299 407 360 .

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