The Government is warning that it is “unlikely” it will be able to give advance notice of any future cuts to the plug-in car and van grant.
This comes after a reduction in the grant for the purchase of electric vehicles (EVs) was announced without any notice in March. The electric car grant was reduced from £3,000 to £2,500 and excluded models that cost more than £35,000 with immediate effect.
The fleet and leasing industry was critical of not having prior notice of the reduction. Some customers even missed out because they were part way through the order process.
Representatives from the Office for Zero Emission Vehicles (OZEV), part of the Department for Transport (DfT) which administers the grant, confirmed they are “unlikely to be able to provide additional notice” given the need to manage the grant budget “on behalf of taxpayers and future grant applicants”.
Following the cuts in March, at a meeting organised by the National Franchised Dealers Association (NFDA) to provide retailers with clarity around the grant, OZEV said the Government intends to “gradually deliver a managed exit” from the grants (which have been extended until 2022/23). However, uptake will continue to be supported through other measures.
OZEV said that when the grant was first introduced lower levels of demand meant they were able to give advance notice of rate changes, but when the market was given advance notice of a reduction in 2018, it sparked a rush from buyers eager to qualify for the grant at the higher level.
OZEV reported that grant-eligible vehicles were sold at more than six times higher than the normal rate, causing officials to bring the original date forward.
Last year (2020), when a further cut was announced, the industry was just given a few hours’ notice.
Previously, dealers and manufacturers had ability 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. But OZEV highlighted they are “unlikely” to offer leeway like this in the future.
Sue Robinson, NFDA chief executive, says 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 were 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”.
The price cap definition to qualify for the plug-in grant says cars must be priced below £35,000 RRP.This 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”.
In response to the new £35,000 qualifying threshold, carmakers have been rushing to adjust electric vehicle (EV) prices, so they remain eligible for the plug-in car grant (PiCG). This includes Nissan, Vauxhall, Peugeot, BMW, and Hyundai. Additionally, Volkswagen has expanded the ID4 range, with a new entry-level City model priced below the qualifying threshold.