UK Government Reduces Its Financial Support For Electric Vehicles

The government in the UK has, with immediate effect, changed the level of grants available to fleets as well as private buyers for electric cars and vans.

The Plug-in Car Grant is reduced by £1,000 to a maximum of £1,500. Only vehicles that cost less than £32,000 (previously £35,000) are eligible.

At the same time the Plug-in Van Grant is also reduced, lowering the amount available to a maximum of £2,500 for small vans up to 2.5 tons gross vehicle weight (previously £3,000). For vans 2.5-3.5t GVW, the grant is now up to a maximum of £5,000 (previously £6,000). In addition, large fleets can access the grant up to a maximum of 1,000 times in a yar

The changes became effective at 0700 GMT today (December 15 , 2021), which means that any unordered vehicles are not eligible for the higher grant.

Richard Jones, the managing director of the UK’s largest leasing firm, Lex Autolease (part of the Lloyds Banking Group), was critical of the changes for fleets, saying:

“This will impact around 60% of the vehicles available in the market, increasing rentals on new orders on a 36-month agreement by around £70 a month overnight.”

While he acknowledged that EV adoption was climbing in the UK, and that that policymakers needed to continuously review the grants available, he also added that the changes to the van market, still in its infancy, could also hamper adoption.

 

“We hope that government departments and industry bodies continue to work together to maximize the opportunities to encourage EV uptake and reassure manufacturers that the UK is leading the EV charge,” he added.

The government defended its position, saying that the plug-in grant scheme, which has supported nearly half a million vehicles over a decade, had helped kickstart a market that was now taking 10% of the market each month, while Plug-in Van Grant orders in 2021 were 250% higher than in 2020, demonstrating what it called, “the strong shift to an electric future.”

While the grant cut will cost fleets more in monthly lease rentals, there remains a generous tax allowance available to fleet drivers with the ability to save as much as £2,000 a year compared with taxation payable on a company diesel or petrol car.

The British Vehicle Rental and Leasing Association (BVRLA) chief executive, Gerry Keaney, added:

“Financial incentives such as the Plug-in Grants have proven to be a positive factor in encouraging people into electric vehicles, evidenced by the continued growth we’re seeing. Subsidies cannot run forever, but the fleet sector relies on certainty, reducing these grants will have a negative impact on this.”