Prior notice of future plug-in grant cuts 'unlikely'

Providing advance notice of any future cuts to the plug-in car and van grant is "unlikely", the Government has warned.

In March, the Government cut the electric car grant from £3,000 to £2,500 and excluded models that cost more than £35,000, with immediate effect.

Representatives from the Office for Zero Emission Vehicles (OZEV), part of the Department for Transport (DfT) which administers the grant, confirmed they were “unlikely to be able to provide additional notice” given the need to manage the grant budget “on behalf of taxpayers and future grant applicants”.

At a meeting organised by the National Franchised Dealers Association (NFDA), OZEV said the Government intends to “gradually deliver a managed exit” from the grants (which have been extended until 2022/23), although uptake will continue to be supported through other measures.

OZEV said that the relatively low levels of demand when the grant was first introduced allowed them to give advance notice of rate changes.

However, when the market was given advance notice of a reduction in the grant in 2018, the news sparked a rush from buyers eager to qualify for the grant at the higher level.

It reported that grant-eligible vehicles were sold at a rate that was more than six times higher than normal, causing officials to bring the original date forward.

A further cut to the plug-in car grant was announced in 2020.

OZEV also highlighted they are “unlikely” to offer leeway for grant changes similar to the 28-day, which was offered following the most recent changes.

This allowed dealers and manufacturers to claim at previous rates and eligibility criteria for any orders that were placed by customers in the 28 days before the grant rate change which were not logged on the portal.

The Government said the UK is “accelerating further towards a greener transport future” as sales of EVs pass the 500,000 mark. 

Sue Robinson, NFDA chief executive, said that the meeting with OZEV officials was “extremely useful” in providing retailers with further clarity around the plug-in grant, including details on the definition of price cap which not all dealers are aware of.

“Going forward, we will continue to work closely with OZEV to best represent our members’ interests and, in turn, provide franchised dealers with clear and timely guidance,” she said.

To qualify for the plug-in car grant, cars must be priced below £35,000 RRP.

The price cap definition includes “any non-standard option fitted by the manufacturer or dealer affecting the capacity of the battery, drive train configuration or maximum net power”; and it does not include “any non-standard option fitted by the manufacturer or dealer which does not affect the capacity of the battery, drivetrain configuration or maximum net power”. 

Carmakers have been responding to the new qualifying threshold by adjusting EV prices, to remain eligible for the plug-in car grant.

Electric cars and vans should be cheaper to make than petrol or diesel vehicles by 2027, according to new research.

Nissan, Vauxhall, Peugeot, BMW and Hyundai have reduced vehicle costs to remain eligible for the grant. While Volkswagen has expanded the ID4 range, with a new entry-level City model priced below the qualifying threshold.

Vehicle manufacturers have pushed back against the Government’s plans to ban the sale of new petrol and diesel vehicles by 2030 by asking for a five year extension.