Plug-in car grant slashed to £2,500, cars over £35,000 now excluded

The plug-in car grant has been slashed from £3,000 to £2,500 from today (March 18th) and will now only be available on electric cars costing up to £35,000.

Grants will no longer be available for higher-priced vehicles, which are ‘typically bought by drivers who can afford to switch without a subsidy from taxpayers’, claims The Department for Transport (DfT).

It says the number of electric car models priced under £35,000 has increased by almost 50% since 2019 and more than half the models currently on the market will be eligible for the grant, including spacious family cars such as the Hyundai Kona 39kWh and the MG ZS EV.

The DfT claims that measures to encourage people to switch to electric vehicles are also working, with nearly 11% of new cars sold in 2020 having a plug. This was up from just over 3% in 2019 – and battery electric car sales almost tripled over that same period. 

The plug-in vehicle grant scheme was renewed last year, with £582 million of funding intended to last until 2022-3.

Says Transport Minister Rachel Maclean:  

“We want as many people as possible to be able to make the switch to electric vehicles as we look to reduce our carbon emissions, strive towards our net-zero ambitions and level up right across the UK.  

“The increasing choice of new vehicles, growing demand from customers, and rapidly rising number of chargepoints means that while the level of funding remains as high as ever, given soaring demand, we are re-focusing our vehicle grants on the more affordable zero-emission vehicles – where most consumers will be looking and where taxpayers’ money will make more of a difference. We will continue to review the grant as the market grows.” 

The plug-in car grant was introduced ten years ago to stimulate the early market for zero-emission vehicles. Since 2011, the Government has provided close to £1.3 billion in plug-in vehicle grant funding to bring ultra-low emission vehicles on to UK roads, supporting the purchase of more than 300,000 vehicles. 

The Government also claims it is investing more than £15 billion of new money in alternatives to cars, including £3bn for buses, £2bn for cycling, more than £4bn for local transport in cities and £5bn for enhancements to the rail network, including electrification and reopening lines closed under the Beeching cuts. 

However, car manufacturers are less than convinced by the move to reduce the plug-in car grant at this time. Says Graham Hoare, chairman, Ford of Britain:

“Today’s news from the UK Government that plug-in grants for passenger and commercial vehicle customers are being reduced is disappointing and is not conducive to supporting the zero-emissions future we all desire.

“Robust incentives – both purchase and usage incentives – that are consistent over time are essential if we are to encourage consumers to adopt new technologies, not just for all-electrics but other technologies too like PHEVs that pave the way to a zero-emissions future.”

Meanwhile, MG has decided to honour the £3,000 plug-in grant until the end of the month, despite the cut. Says Guy Pigounakis, MG’s Commercial Director:

“At MG, we believe in ensuring our customers are as happy as they can be with their new cars and in recognition that many of them will have made the decision to buy an MG EV with the £3,000 grant funding in mind, we have decided to honour that for all purchasers who order a new MG ZS Electric or MG5 EV for delivery before the end of this month.

MG currently offers three plug-in models in the UK – the fully electric MG ZS EV and the MG5 EV and the MG HS Plug-in hybrid (which doesn’t qualify for a grant).