Grants for Electric Car Buyers Cut

2020 was a game changer year for the arrival of fully ’Battery Electric Vehicles’  (BEVs) in the UK new vehicle market, with 108,205 BEVs registered in 2020, with 200,000 BEVs expected to be registered in 2021, including a game changer year for the arrival of electric commercial vehicles/vans.

By 2030, sales of new cars and vans powered wholly by diesel and petrol will be banned in the UK, with Hybrid vehicles to follow 5 years later so between now and then, most new vehicles launched will be offered with some form of electrification, accelerating demand for electric charge points across the UK, to meet the needs of small to medium enterprises.

Within the business user vehicle market, the government introduced significant  ‘Benefit-in-Kind’ (B-I-K) incentives for BEVs, effective from year 2020/2021, with just a 1% B-I-K tax liability for financial year 2021/22 and 2% in 2022/23 and frozen at 2% for 2023/24 and 2024/25.

In February 2021, the government also announced a £50 million extension of the home and workplace grants for installing charger points with the workplace charging scheme being open to small to medium enterprises, for the first time, which includes funding for the accommodation sector such and B&Bs, to provide a boost to rural areas, in places like the South West.

Last week, in a development that was unexpected and seen within the automotive industry as ‘un-helpful’, the government announced that with immediate effect, the current government vehicle Plug-In Grant was being reduced from £3,000 to £2,500 and at the same time, the list price of vehicles, including vans, that qualify for the government grant, was being reduced from £50,000 to £35,000.

In essence, the government are trying to focus on more of the grants going towards lower priced volume models, that appeal to private buyers, as well as company car drivers and remove the incentive for much more expensive models, that are typically only purchased by company executives, who still are able to enjoy the significant Benefit in Kind tax incentives that are in place.

It is thought that the government are also looking to put the emphasis on car manufacturers reducing the list price of their  electric vehicles, to make them more affordable to the masses, with Citroen, for example, responding to last week’s announcement, by announcing the list price reduction on their electric model, to below the qualifying grant limit of £35,000.

Blog Article Written By: 
Leon Wilce - Fleet Specialist Consultant
Westcar Consulting
leon@west-car.co.uk