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Government prepares for plug-in grant future

Date: 24 February 2015   |   Author:

The Government will introduce three new bandings for plug-in vehicles from April to prepare the market for how it will help fund purchases after the current plug-in car grant ends.

The new categories are based on the emissions output and zero-emissions range of each vehicle.
Category 1 vehicles are those that have CO2 of less than 50g/km and a zero-emission range of at least 70 miles. Category 2 vehicles must have emissions below 50g/km and a zero-emissions range of 10-69 miles. Category 3 vehicles have emissions of  50-75gkm and a zero-emission range of at least 20 miles.

The Office for Low Emission Vehicles administers the grant and said that all vehicles falling into the new categories still have full access to the current £5000 to fund vehicle purchases.

OLEV has now delivered half of its funding after passing the 25,000-vehicle mark since the scheme launched in 2010. The Government has committed to the vehicle plug-in grant until either 50,000 grants are issued or until 2017, whichever is first.

The BVRLA believes the current plug-in car grant will be exhausted by as early as summer 2016.
It has been confirmed to BusinessCar that the new plug-in vehicle categories will likely inform how much incentive each model type will receive in the future.

It could mean hybrids with a smaller zero-CO2 range would receive less grant funding when the next grant is announced. The categories could also inform tax bandings for plug-in vehicles.

BusinessCar asked OLEV if category 2 and category 3 vehicles will receive a smaller grant in the future, but it failed to respond to numerous requests as BusinessCar went to press.

As part of the new category system, OLEV has also increased the percentage value a customer can claim on the grant from 25% to 35% of the value of the vehicle up to £5000. This means the Renault Zoe in Expression trim, which is priced below £20,000, will receive the full £5000 for the first time.

Ken Ramirez, Renault UK managing director, said: "We welcome the changes announced by OLEV as the move to a banding system for grant funding recognises the real-world practicality and zero-tailpipe emission advantages that electric vehicles have over other types of alternative fuel vehicles."

OLEV handed out 2000 grants for plug-in vehicle purchases in January this year and the DfT said ultra low-emission vehicle sales in 2014 were four times higher than in 2013. The UK now has a larger plug-in vehicle market than Germany and France.