Lower EV grant does not change fleet electrification trajectory

Lower EV grant does not change fleet electrification trajectory

Posted by

Andy Bruce

December 2021

There has been an understandable degree of shock and bemusement at the sudden change to the Plug-in Car Grant. It means cars planned for ordering will now need to be re-quoted to take into account the higher costs involved.

None of this is ideal. Fleets require stability to ensure smooth planning of replacement cycles. And for those fleets in the middle of transitioning to electric, it will be a blow facing greater monthly leasing costs.

But it’s more a speed bump on the road to electrification than a stop sign. It’s inconvenient, certainly, but the rationale for decarbonisation remains as strong today as it did before the changes were introduced to the Plug-in Car Grant.

In fact I have some sympathy with the Office For Zero Emission Vehicles (OZEV). They’ve tried before to announce in advance the changes and were suddenly inundated with grant requests. It was untidy and clearly didn’t work. Since then OZEV has chosen to introduce changes without warning – as happened in March earlier this year – to prevent ‘grant cramming’.

What’s more they have prepared the ground by saying further changes would be introduced without warning and that the grant was, basically, on run out.

So the changes that have been introduced, in many ways, really weren’t a surprise. It was, perhaps, more about the timing and delivery.

But the customers I’ve been talking to remain fully committed to electrification of their fleets. After all, the arguments are compelling: immediate improvements to air quality; improved corporate social responsibility; lower fleet whole life costs; and slashed benefit in kind driver taxation. I think it would be hard for any CEO or FD to argue against such benefits.

Nevertheless, it’s worth pointing out that the window of certainty is closing. We know that company car taxation rates are to remain stable until April 2025 – beyond that some visibility would be highly useful, of course. But let’s just work with what we have: whether it’s company cars or car provision delivered through salary sacrifice, between now and  2025 fleets have great incentives to go electric. Grant or not.

The changes made to the Plug-in Car Grant

Old grant value
  • 35% of purchase price, up to £2,500
New grant value
  • 35% of purchase price, up to £1,500
Grant eligibility
  • Cars must cost less than £32,000 – previously £35,000.

Changes made to the Plug-in Van Grant

Old grant value
  • 35% of purchase price up to £3,000 for small vans < 2.5 tonne gross vehicle weight (t GVW)
  • 35% of purchase price up to £6,000 for large vans 2.5-3.5t GVW
New grant value
  • 35% of purchase price up to £2,500 for small vans < 2.5 tonne gross vehicle weight (t GVW)
  • 35% of purchase price up to £5,000 for large vans 2.5-3.5t GVW

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