What is the UK plug-in car grant?

Nissan Leaf - front
10 Mar, 2016 10:15am Chris Rosamond

Government slashes thousands from the Plug-in Car Grant

The UK is steadily embracing alternatively-fuelled vehicles. Sure, hydrogen power is a way off, but mainstream electric cars and plug-in hybrids make up a small but significant portion of the market, and most importantly, that number is growing every year. A major reason for this growth is the plug-in car grant, set up by government to encourage consumers to consider an electric vehicle. 

The scheme was set up in 2011 to offer a large chunk of taxpayer's cash to subsidise people purchasing electric cars. The reason was that at that point, there were few electric or plug-in hybrid options, and they were significantly more expensive than a regular petrol or diesel car. Five years on, though, the market has changed, and from 1st March 2016 the plug-in grant has changed too. 

Best electric cars

The original grant was set at a generous £5,000 for all eligible vehicles, but now things are slightly different. Read on for our guide to what the changes mean - and whether your next vehicle might be a winner or a loser.

How is the plug-in car grant changing?

The electric car subsidy is changing in three significant ways from March 1st 2016

1.   From that date onwards, eligible cars will be banded into the following three categories: 

  • Category 1. Vehicles with a ‘zero-emission’ range of 70 miles, and CO2 emissions lower than 50g/km.
  • Category 2. Vehicles with a ‘zero-emissions’ range between 10 and 69 miles, and CO2 emissions lower than 50g/km.
  • Category 3. Vehicles with a ‘zero-emissions’ range of at least 20 miles, and CO2 emissions between 50-75g/km.

2.   The maximum available grant is being cut from £5,000 to £4,500 for category 1 vehicles, but slashed from £5,000 to just £2,500 for category 2 and 3 vehicles.

3.   A £60,000 ‘on the road’ price cap is also being introduced, so cars which are more expensive will not be eligible for the grant at all.

Plug-in car grant: winners and losers

The change means most full-electric cars will continue to receive the full (but lower) grant, but many plug-in hybrid vehicles in categories 2 and 3 will have their grants cut in half. 

This includes the Mitsubishi Outlander PHEV – currently the UK’s best-selling low-emissions vehicle – which will be £2,500 more expensive after March 1st.

Mitsubishi Outlander PHEV 2015 facelift front

While it’s not good news for individual buyers of many of the most popular hybrids, the changes make sense if the government wants to target support where it’s needed most.

Full-electric cars like the Nissan Leaf and Renault Zoe would be significantly more expensive than equivalent petrol or diesel family hatchbacks and superminis were it not for the reduction in price provided by the plug-in car grant. They also suffer from very heavy depreciation, with the Nissan Leaf retaining only 20% of its value after three years/36,000 miles, so total running costs could become prohibitively expensive were it not for the grant.

The fastest depreciating cars

The hybrids in category 2 and 3 tend to be larger cars so the cost of the advanced plug-in powertrains is a smaller proportion of the overall list price. It means that they’re more competitive against petrol and diesel alternatives. It’s a similar story on the residual value front where our latest figures suggest the category 2 Mitsubishi PHEV hybrid should keep up to 45 per cent of its value after three years/36,000 miles.

With small, all-electric category 1 cars offering far lower emissions than the large plug-in hybrids in categories 2 and 3, it’s understandable that the Government is looking to refocus the grant to incentivise more environmentally friendly buying decisions.

Cars that hold their value best

So what’s the plug-in car grant change deadline?

The key date here is February 29th 2016, but that’s the deadline for claiming a plug-in car grant under the existing, more generous, terms – NOT the deadline for ordering your car. 

How do I apply for a plug-in car grant?

The Plug-in Car Grant application is handled by the dealer you purchase your car from, so make sure you give them time to sort out the paperwork.

Mercedes-Benz B-Class Electric Drive - plug in

The scheme requires no paperwork to be completed by the purchaser (but you may be asked to complete a survey questionnaire) and the grant is deducted from the purchase price by the dealer so customers never have to pay the full list price.

Cars currently eligible for the plug-in car grant

This is the official list of cars eligible for Plug-In Grants – at the current rate of £5,000 for applications received up to February 29th, and the new lower rates by category after that date.

Category 1 Vehicles 

BMW i3
• BYD e6
Citroen C-Zero
Ford Focus Electric
Kia Soul EV
Mercedes-Benz B-Class Electric Drive
Mitsubishi iMiEV
Nissan e-NV200 5-seater and 7-seater
Nissan LEAF
Peugeot iON
Renault Fluence
Renault ZOE
Smart fortwo electric drive
Tesla Model S
Toyota Mirai
Volkswagen e-up!
Volkswagen e-Golf 

Category 2 Vehicles

Audi A3 e-tron
BMW i8*
BMW 225xe
BMW 330e
Mercedes-Benz C350 e
Mitsubishi Outlander PHEV
Toyota Prius Plug-in
Vauxhall Ampera
Volkswagen Golf GTE
Volvo V60 D6 Twin Engine
Volvo XC90 T8 Twin Engine**

Category 3 Vehicles

Mercedes-Benz S500 Hybrid*
Porsche Panamera S E-Hybrid

*The recommended retail price for these cars is above £60,000, so they will not be eligible for the plug-in car grant from 1 March 2016. However, they remain genuine ultra low emission vehicles.

**Variants with a recommended retail price over £60,000 will no longer be eligible for the plug-in car grant from 1 March 2016. Variants with a recommended retail price below £60,000 will remain eligible for the plug-in car grant from 1 March 2016, provided that the full purchase price (including number plates, vehicle excise duty and VAT) is also below £60,000.

Let us know what you think of the plug-in car grant changes in the comments section below...

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