UK Sales of Plug-in Cars Surge As Buyers Worry About New Tiered Incentives

Back in 2011 when cars like the Nissan LEAF were hitting the shores of the UK for the first time, electric cars didn’t have a particularly good reputation among your average car buyer. Alongside the general range anxiety felt by consumers about running out of charge miles from a public charging station, the overwhelming attitude towards electric cars in the mass media — hindered perhaps by the antics of Messrs Clarkson, May and Hammond on BBC Top Gear — was a negative one.

Sales of cars like the Nissan LEAF continue to rise in the UK

Sales of cars like the Nissan LEAF continue to rise in the UK

Fast forward just four years, and sales of electric cars are soaring skyward, with year to date figures for 2015 showing a 226.5 percent increase in sales over the same period in 2014. These days, even one of the former hosts of the now-cancelled Top Gear drives a BMW i3, and cars like the Tesla Model S have proven once and for all to consumers that electric cars aren’t all slow, boring, small cars like the nationally-hated G-Wiz.

But while the visibility of electric cars is much better in the island nation now than it was four years ago, UK motoring magazine Auto Express says there’s a much simpler reason why plug-in car sales are now the best they’ve ever been: upcoming changes to the generous plug-in grants that have been offered for more than four years to anyone wanting to buy a car with a plug.

The change, first announced in the spring by the then coalition Conservative majority, Liberal Democrat minority government and then backed more vigorously by the Conservative party after it’s outright victory in the summer’s General Election, will see the existing simple plug-in car grant scheme replaced by a tiered ultra-low emission vehicle grant scheme.

The original UK Government grant allocated enough funds for a total of 50,000 plug-in vehicles to be purchased, something the UK government initially predicted would take the program to the start of 2017. But with funds running out, the UK government is preparing to make the switch to the new scheme sooner than anticipated.

The Mitsubishi Outlander, currently eligible for the full £5,000 grant, will soon be eligible for a much smaller one.

The Mitsubishi Outlander, currently eligible for the full £5,000 grant, will soon be eligible for a much smaller one.

As we explained back in February, the outgoing scheme is fairly simple. To be eligible, 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. A similar scheme, offered to businesses, offered up to £8,000 in grant funds per commercial vehicle, which we understand will also be replaced with a similar tiered scheme.

The new scheme will tier vehicles according to their total zero emission range, and tailpipe emissions, with the highest incentives available for “Category 1” cars — capable of more than 70 miles of zero-emissions travel and having tailpipe emissions of less than 50 grams of CO2 per kilometer driven — and the lowest incentives for “Category 3” cars with tailpipe emissions of between 50 and 75 grams of CO2 per kilometer and a zero emission range of at least 20 miles. Assuming current demand continues for low-emission vehicles, the scheme is expected to run from 2015 through until 2020.

So far so good, but at the time of writing, the UK Government has yet to decide just how much of the £200 million it has set aside for the program will be allocated to each of the three categories or how much claimants can expect to get for buying a cleaner vehicle. As a consequence, new car buyers, especially those opting for plug-in hybrid cars which will likely end up in the lowest tier of incentives under the new program — like the highly-popular Mitsubishi Outlander plug-in hybrid — are snapping up the old £5,000 grant before it gets replaced.

Even before the new scheme comes into force however, the UK Government isn’t keen on keeping the low emission vehicle grants running indefinitely. Just as it has slashed support for renewable energy programs and domestic photovoltaic solar panel installations in favour of partnering with China on building new nuclear power stations instead, a source at the Office for Low Emission Vehicles told Auto Express that the program won’t last for ever.

“We’re far ahead of expectation over the last 12 months,” they said. “The idea is the Government gracefully exiting stage left in due course.”

It’s no wonder then that financially-savvy buyers are snapping up incentives before they’re all gone. The question now becomes what will happen when they are all gone.

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