OLEV confirms it will be changing funding structure for plug-in car grant this year
25 June 2015
The Office for Low Emission Vehicles has confirmed that the current version of the £5000 plug-in car grant will end this year, with a new funding system being planned as plug-in vehicles grow in popularity and move to the next phase becoming established.
The actual date for when the grant will change has not been confirmed, and until it states otherwise, the OLEV said it will honour any deal placed on its system for a qualifying car, provided that the vehicle has been allocated to a customer and is delivered and registered within nine months.
The OLEV has not revealed how funds will be allocated to plug-in vehicles after the current arrangement ends, but it will likely be along the lines of a previously announced tiered system, based on new categories, with lower-emission full-electric vehicles given a larger grant than plug-in hybrid models that still use an internal combustion engine.
"This Government has committed £500m over the next five years to support the thriving ultra-low emission vehicles sector and there has been no change to our previously announced position on the plug in car grant," said aDepartment for Transport spokesperson. "All three categories of eligible vehicles - outlined in April - will continue to be eligible for plug-in grants of up to £5000 until 50,000 grants have been issued. An announcement on appropriate grant levels for each category thereafter will be made in due course."
The BVRLA had sought confirmation on the future of the grant from the OLEV to combat growing uncertainty within the leasing sector, which had led a number of companies to remove the £5000 grant from their quotation systems.
BusinessCar revealed in February this year that the OLEV would introduce a new category system that would put plug-in cars in three separate categories, based on CO2 emissions and zero-emission range. Category 1 vehicles must have CO2 emissions of less than 50g/km and a zero-emission range of at least 70 miles, while Category 2 is for vehicles which emit less than 50g/km but can only travel between 10 and 69 miles on electricity alone. Meanwhile, Category 3 vehicles are classed as having CO2 of 50-75g/km and a zero-emission range of at least 20 miles.
For now, all three categories are eligible for the full discount, but the BVRLA believes this is likely to change in the coming months.
The OLEV said it will be reviewing the van grant "in due course", but this is to remain at 20% up to £8000 until further notice, as there have been 1500 van claims to date, compared with more than 25,000 car claims. Nearly half of the car claims have been in the first five months of 2015, a huge acceleration that has led to the doubt about how long the pot of grant money will last for, and when moves to change to a stepped system using the three bands could be brought in.
Around £200m of the £500m investment has been set aside to continue the grant scheme from 2015 to 2020, but the grant amounts made available to cars in each of the three categories may need to scaled, in order to prevent money for the scheme running out before 2020.
Gerry Keaney, BVRLA chief executive, said: "We are delighted that the OLEV was able to provide this speedy and common-sense response to our members' concerns.
"Losing the £5000 subsidy would have a major impact on a monthly lease rental, so leasing companies need to know that their quoted price won't be hit because the vehicle lead time extends beyond the plug-in grant's cut-off date.
"Registrations of ultra-low emission vehicles have taken off in recent months and the rental and leasing industry has been leading this charge. The uncertainty surrounding the grant was threatening to hike lease prices for ULEVs and reduce their appeal to prospective customers."
The plug-in car grant was originally launched in 2011 to increase the take-up of ultra-low emission vehicles. Under the scheme, motorists can receive up to a 35% discount off the basic price of an eligible car, up to maximum £5000.
Based on the new categories, here is the current list of cars eligible for the plug-in car grant and which category they would fit in. It could mean mild hybrids and some plug-in hybrids will receive less grant money to help fund purchases.
Category 1 - under 50g/km, at least 70 miles range
BMW i3 range extender
Ford Focus Electric
Kia Soul EV
Mercedes-Benz B-class electric drive
Nissan e-NV200 Combi
Smart Fortwo electric
Tesla Model S
Toyota Prius plug-in
Category 2 - under 50g/km, between 69 and 10 miles range
Audi A3 Sportback E-tron
Mitsubishi Outlander PHEV
Volkswagen Golf GTE
Volvo V60 plug-in hybrid
Category 3 - 50-75g/km, 20 miles range
Mercedes-Benz S500 plug-in hybrid AMG-L
Porsche Panamera S E-hybrid