Government cuts plug-in vehicle grants and changes eligibility criteria

The Government has cut the plug-in car grant by £1,000 and reduced the plug-in van grant by £500 in order to make remaining funds go further as more drivers make the switch to electric.

The Plug-in Car Grant (PiCG), which had given consumers 35% off the purchase price of an EV up to a maximum of £2,500, has been cut by £1,000 to £1,500.

The eligibility criteria for the plug-in car grant has also changed. Cars with a recommended retail price (RRP) of £35,000 or less had been eligible, but that has now been reduced by £3,000 to £32,000 or less.

Furthermore, hybrid electric cars, which had CO2 emission of less than 50g/km and could travel at least 112km (70 miles) without any emissions, are no longer eligible.

In terms of the Plug-in Van Grant (PiVG), the grant rate for light commercial vehicles (LCVs) has also been cut.

For small vans, 2.5 tonnes gross vehicle weight (GVW) or less, the grant had given consumers 35% off the purchase price up to a maximum of £3,000. That has now been cut to £2,500.

For larger vans, 2-3.5 tonnes GVW, the grant has also been reduced, from a maximum of £6,000 to £5,000.

There are no changes to grant rates for vehicles over 3.5 tonnes.

The total funding committed by the Government to support the transition to zero emission vehicles is £3.5 billion.

This includes recent investments like an additional £350 million to support the electrification of UK vehicles and their supply chains, as part of its £1bn commitment, and a further £620m for EV grants and infrastructure, with a focus on local on-street residential charge points.

The plug-in grant scheme has supported almost half a million electric vehicles (EVs) over the past decade.

But, with sales of zero-emission cars up by 89% and plug-in van orders already more than 250% higher than in 2020, ministers have decided to reduce the grant.

In an email to plug-in grant portal users, the Office for Zero Emission Vehicles (OZEV) said: “In order to make our available funding go further and help more businesses and consumers to make the switch, we are re-focusing our vehicle grants on the more affordable vehicles, reducing grant rates and limiting the number of van grants available to 1,000 per customer per year.”

The new terms, says OZEV, apply December 15 and the grant portal has been temporarily suspended as it transitions to the new rates.

Transport Minister Trudy Harrison said: "The market is charging ahead in the switch to electric vehicles.

"This, together with the increasing choice of new vehicles and growing demand from customers, means that we are refocusing our vehicle grants on the more affordable vehicles and reducing grant rates to allow more people to benefit, and enable taxpayers’ money to go further.

"We want as many people as possible to be able to make the switch to an electric vehicle, which is why we will also be introducing new rules to make it easier to find and pay at chargepoints. This will ensure drivers have confidence in our charging infrastructure, as we look to reduce our carbon emissions, create green jobs and level up right across the UK."

New plug-in van grant limits

The Government has also dealt a blow to those large fleets which are electrifying vehicles by putting a limit on the number of times they can apply.

Each business, organisation or individual may receive up to 1,000 grants each financial year (April 1 to March 31).

Limits apply to end customers and not to lease companies.

Existing per customer and total limits on plug-in truck grant orders will continue to apply.

The move, says OZEV, will ensure that the plug-in van grant scheme is “sustainable” and to ensure fair distribution of the grant across stakeholders.

Motorcycle and moped grants will also be changing, with the Government now providing a 35% discount up to a maximum of £500 off the cost of a motorcycle, and £150 for mopeds, with a price cap on vehicles of £10,000.

It had been offering a 20% discount up to a maximum of £1,500 off the cost of both electric motocycles and mopeds. 

Almost 50% of mopeds sold this year were battery electric, it says, with some models now at price parity with their internal combustion engine equivalent. These changes and the new price cap will target funding where it is really needed to support the transition to zero emission two-wheelers.