The Government is closing the Plug-in Car Grant (PiCG) from today as it moves the focus onto improving the UK’s EV charging network.  

All existing applications for the grant will continue to be honoured

All existing applications for the grant will continue to be honoured, along with sales where a car has been sold in the two working days before the announcement but an application for the grant from dealerships has not yet been made. However, there will be no grant funding for all sales from now on. 

In line with the move, £300m in grant funding will now be refocused towards extending plug-in grants to boost sales of plug-in taxis, motorcycles, vans and trucks and wheelchair-accessible vehicles.  

The closure of the PiCG had been widely anticipated although many in the fleet and automotive sectors had long said that the incentive remained vital to EV take-up.  

The grant was launched in 2011 to help bridge the upfront price difference between ultra-low emission cars and their internal combustion engine equivalents, initially offering £5,000 or up to 20% off the purchase price of a new car. Since then, it’s provided over £1.4bn and supported the purchase of nearly half a million clean vehicles.  

The Department for Transport and Office for Zero Emission Vehicles (OZEV) said the scheme had succeeded in creating a mature market for ultra-low emission vehicles, helping to increase the sales of fully electric cars from less than 1,000 in 2011 to almost 100,000 in the first five months of 2022 alone.  

They added that the shift in focus would enable funding to target expanding the public charge point network. Earlier this year, the Government unveiled its long-awaited Electric Vehicle Infrastructure Strategy, pledging to increase the UK’s EV charge points 10-fold and supported by a £1.6bn investment in charging infrastructure committed in part when the 2030 ICE ban was announced.  

The Plug-in Car Grant had been slashed in a series of changes in recent years that had also seen plug-in hybrids effectively removed from the scheme. And OZEV had signalled in May 2021 that the Government intended to “gradually deliver a managed exit” from the plug-in grants going forwards, although it said other support measures would be continued.  

OZEV had also only confirmed PiCG funding until 2022/23. While it announced an extension to the Plug-in Van Grant earlier this year until 2024/25, there had been a conspicuous absence of news on the PiCG, which had already been further reduced to £1,500 and the price ceiling lowered again in December 2021, meaning only around 20 cars were still eligible for it. This had led to a further flurry of action among carmakers to reduce prices to ensure they still met the grant criteria.   

In a statement, the Government said it had always been clear the Plug-in Car Grant was temporary and said that successive reductions in the size of the grant, and the number of models it covers, had had little effect on rapidly accelerating sales or on the continuously growing range of models being manufactured.  

It also said that significant savings in running costs for electric cars compared to petrol or diesel equivalents can often exceed the current £1,500 value of the grant, and electric car drivers will continue to benefit from incentives including zero road tax and favourable company car tax rates, which can save drivers over £2,000 a year.  

Its findings are backed by a new public evaluation report, out today and highlighting that while the Plug-in Car Grant was vital in building the early market for electric vehicles, it has since been having less of an effect on demand, with other existing price incentives, such as company car tax, continuing to have an important impact. The report also found the plug-in van market will benefit from grant incentives more to support businesses and their fleets in making the switch.  

Transport Minister Trudy Harrison said: “The Government continues to invest record amounts in the transition to EVs, with £2.5bn injected since 2020, and has set the most ambitious phase-out dates for new diesel and petrol sales of any major country. But government funding must always be invested where it has the highest impact if that success story is to continue.  

“Having successfully kickstarted the electric car market, we now want to use plug-in grants to match that success across other vehicle types, from taxis to delivery vans and everything in between, to help make the switch to zero-emission travel cheaper and easier.”  

The BVRLA agreed that the withdrawal of the PiCG had been well signposted and said it was right that the Government prioritised its electric vehicle subsidies towards vans and charging infrastructure, where they are needed most.  

But Toby Poston, director of corporate affairs, added: “Although the grant was small and only a handful of electric vehicles were eligible, its withdrawal will be a symbolic moment that could damage confidence in the fragile EV market.”

And he expressed concern for the thousands of drivers that have already ordered EVs in good faith, expecting to get the benefit of the grant.   

“The supply issues that continue to beset the automotive industry mean that many vehicle orders are being delayed or even cancelled. OZEV should review its decision to remove grant eligibility for vehicles delivered more than 12 months after an order was entered on the grant register.”  

The BVRLA agreed that most demand for EVs is being driven by the favourable Benefit-in-Kind tax rates available to workers in company car or salary sacrifice schemes.

“As inflation surges and business and consumer confidence falls, the Government needs to maintain these incentives if the country is to have any chance of hitting its ambitious decarbonisation targets,” said Poston.

The BVRLA has also launched a new #SeeTheBenefit campaign this week, urging the Chancellor to support the uptake of electric cars by keeping Benefit-in-Kind rates low and giving foresight beyond the current 2024/25 cut-off – and it’s calling on the fleet sector to help support its work. It’s encouraging fleet industry professionals to write to their local MP to educate them on how company car schemes are democratising the move to EVs.   

MPs will then be asked to pledge their support to the #SeeTheBenefit campaign at an event in July and encourage the Chancellor to act in the Autumn Budget.