Yesterday’s (11th October 2018) announcement of the changes to the Plug In Car Grant (PICG) have come as something of a surprise to the fleet industry, particularly coming so close to the Budget. The grant for Battery Electric Vehicles (BEVs) has been significantly reduced and it has been removed altogether for Plug-In Hybrids (PHEVs).
The surprise announcement’s timing is interesting, and time will tell if the Government uses the Budget to soften the blow to Plug-In Hybrid and BEV drivers by bringing forward the lower 2020/21 BIK rates, which the fleet industry has been calling for. If they don’t, then the reduction in the PICG could leave a big hole in the Government’s Road to Zero strategy.
By the 9th November 2018, giving drivers very little time to react and change any car choices, the PHEV grant for category 2 & 3 vehicles will disappear, losing drivers £2,500. Category 1 drivers applying for the BEV grant will lose £1,000 as they will only receive £3,500 when the previous amount was £4,500. Interestingly there has been no mention of any changes to the grant for van drivers.
If there are plans to reward BEV drivers in the Budget by bringing forward the reduction in BiK rates (from 16% to 2%) then this will certainly be welcomed. However, the reduction for PHEVs is much less significant*. With Plug-In Hybrids being seen as a stepping stone to fully electric vehicles, they play a vital role in the Government’s clean air strategy. With the removal of the PICG for this category of vehicle, and very little incentive on BiK, they may no longer be seen as an attractive option for many company car drivers and the strategy will ultimately fail in its endeavour to encourage their uptake.
While prices for BEVs are coming down, manufacturers are left with no time to act in order to counter the loss of the PICG. It certainly leaves drivers and fleets very little time to do anything, including rush to place orders before the 9th November.
* BiK for PHEVs will reduce from 16% (19/20 tax year) down to 14% for a sub 50g/km vehicle capable of driving up to 30 miles on pure electric. For vehicles with an electric driving range between 30 – 39 miles this would be down to 12% from the 16% currently planned for 2019/20.
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