UK Government Announces Changes to Plug-in Car Incentives, Introduces Banding Based on ZEV Capabilities.

To date, the UK’s plug-in car grant scheme has been fairly simple, offering buyers up to £5,000 granting giving an instant discount off the sticker price of a brand-new electric car or plug-in hybrid.

Eligibility for the grant has also been fairly straight forward: vehicles must come with a 3-year or 60,000 mile warranty; a 5-year minimum battery warranty;  have a minimum top speed of 60 miles per hour or more; a range greater of 70 miles for electric cars or 10 miles for plug-in hybrids; and emit less than 75 grams of carbon dioxide per kilometre driven. They must also be registered in the vehicle category ‘M1,’ excluding motorcycles and quadricycles from the grant.

Under the new scheme those who buy a fully electric car will benefit the most.

Under the new scheme those who buy a fully electric car will benefit the most.

Today, the UK government announced that will all change from April, with the introduction of three different tiers of vehicular eligibility and a regulatory change which means the £5,000 maximum grant can be used to pay for as much as 35 percent of the vehicle’s value.

Previously, the grant was set at a maximum of £5,000 or 25 percent of the vehicle’s sticker price, whichever was lower, meaning that cars like the Renault ZOE EV will finally be eligible to use the full £5,000 set aside for each claimant. Previously, the ZOE’s MSRP was too low to enable buyers to claim the full £5,000 discount, since its sticker price was under £20,000.

Announcing the change in regulation this morning, Transport Minister Baroness Kramer hailed the outgoing plug-in car grant program a complete success, and said that the new scheme coming into force on April 1 this year will get more people behind the wheel of an ultra-low emission vehicle.

“More and more people are deciding a ULEV is the right choice for them,” she said in the official Governmental press release. “They are great to drive, easily chargeable at home or on the street, and cheap to use with running costs from just 2 pence a mile. The government’s #500 million investment will help more models become available to suite a wide range of budgets.”

In January alone, the Office for Low Emission Vehicles (OLEV) said nearly 2,000 claims were made under the plug-in car and plug-in grant schemes, with more than 25,000 claimants in total since the scheme began in 2010.

Plug-in car sales in the UK have rocketed in recent months, with nearly 2,000 plug-in car applications made during January 2015 alone.

Plug-in car sales in the UK have rocketed in recent months, with nearly 2,000 plug-in car applications made during January 2015 alone.

Responding to the OLEV announcement, Ken Ramirez, managing director of Renault UK said that the higher percentage cap was a welcome bonus for the automaker and will help more people than ever before afford the five-seat plug-in.

“The Renault ZOE hatchback was already the most affordable electric vehicle on the market,” he said. “The move to the 35 per cent funding for cars in the lowest emitting band will make ZOE even more affordable and encourage yet more motorists to move to zero tailpipe emission vehicles.”

The banding referred to by Ramirez, also announced today by the UK Government, marks the start of a gradual move away from a blanket incentive for all plug-in cars, offering the largest financial incentives to the cars which travel the furthest in electric operation. Importantly too, the grants also seem not to specify fuel source, leading us to believe that hydrogen fuel cell cars will also be included in the new ULEV grant.

While it isn't 100 percent clear, the new wording of the ULEV grants seems to pave the way for hydrogen fuel cell cars too.

While it isn’t 100 percent clear, the new wording of the ULEV grants seems to pave the way for hydrogen fuel cell cars too.

In order to be classified in Category 1, cars will need to have tailpipe emissions of less than 50 grams of CO2 per kilometre and travel more than 70 miles in ‘zero emission’ mode.

In order to be classified in Category 2, cars will need to have tailpipe emissions of less than 50 grams of CO2 per kilometre and travel between 10 and 69 miles in ‘zero emission’ mode.

In order to be classified in Category 3, cars will need to have tailpipe emissions of between 50 and 75 grams of CO2 per kilometre and have a zero emission range of at least 20 miles.

Sadly, plug-in motorcycles and quadricycles, like the Zero DS electric motorcycle and Renault Twizy respectively, are still ineligible for any funds.

When the tiered system comes into force later this year — likely some time around July — it is expected that for a while all full-size passenger vehicles with zero emissions capabilities of at least 10 miles will continue to be eligible for the full £5,000 government grant. But when either 50,000 grants have been issued in total or January 1, 2017 — whichever is soonest — the three categories offer appropriately tiered incentives.

Cars in category 1 will be eligible for the highest grant, while cars in category 3 will be eligible for the least. This will, for example, make it more economical for someone to buy a full-sized electric car over a comparably-priced plug-in hybrid, since the former will attract more of a government incentive than the latter. Given that the Mitsubishi Outlander Plug-in Hybrid has become something of a darling among company-car drivers due to the soon-to-end benefit in kind tax band of zero percent, we’ll be paying close attention to this particular vehicle’s sales figures over the coming months as the new legislation comes into force.

The change in legislation is a big one, and could affect buyers of cars like the Mitsubishi Outlander Plug-in Hybrid

The change in legislation is a big one, and could affect buyers of cars like the Mitsubishi Outlander Plug-in Hybrid

Details on the grant itself are still sketchy at this time: the official governmental press release doesn’t do a great job of explaining the process. But rest assured we’ll bring you more information as we have it, helping you decide which vehicle is best for your needs given the impending three-tiered approach for future grant recipients.

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  • Michael Gill

    u201cMore and more people are deicing”. Exactly!

  • Nigel Jones

    I like the idea of tiering, but that also those should evolve over time (like BIK ratings). 70 miles today, 100 miles in 2 years etc. With the new rates possibly not coming into force until 2017 they may be near irrelevant before they arrivennnI wonder if there’ll be any movement on the BIK ratings too — whilst they’re already tiered on CO2 ratings, I think including ZEV range in the factors would be a solid move.

  • JohnCBriggs

    Is the Zoe so cheap because you have to rent the battery?

  • Sounds like positive move to encourage more electric (zero-emission) miles to be driven.

  • code zombie

    STILL no support for the EV motorcycle industry, utterly disgraceful…