Further response to the change to the Plug-in Car Grant

Monday, October 15, 2018 - 08:49
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Following the government’s announcement last week that the Plug-In Hybrid car grant is to be scrapped from the 9th November, there has been a major response to this decision from the motor industry (View original article here). Most of the response has been negative and many players in the industry see this as a retrograde step and will make the Government’s target of zero-emissions more difficult to achieve. The move from reliance on petrol and diesel has as much to do with confidence as it is for price. If consumers feel that if goalposts are moved by Government decisions, then they are more likely to remain with what they know than embrace new technology that might lose Government support further down the line.

Here are a few of the responses from industry:

BVRLA Chief Executive Gerry Keaney said: “The Government’s decision to cut the plug-in grant just months after launching the Road to Zero strategy is unbelievably short-sighted and will only serve to stifle the uptake of electric vehicles.

“This year we have already seen a significant increase in the uptake in electric vehicles. There is clearly momentum for change amongst motorists, but this has always been dependent on them being able to afford to choose an electric vehicle. The plug-in grant has been essential in supporting this growth. The BVRLA  also took a big step forwards on this front when it launched its ‘Plug-in-Pledge’ in July this year, which could supercharge the uptake of lower emission vehicles by increasing our member’s electric and hybrid plug-in fleets to 720,000 by 2025. The changes announced to the plug in grant yesterday can only serve to obstruct the achievement of this goal.

“The removal of the plug-in grant incentive makes our calls to expedite the shift to a 2% tax rate for ULEV company cars even more crucial, as without either measure there is very little motivating motorists to choose a low emission vehicle. Only last month the Prime Minister was setting out a variety of excellent plans to stimulate the production of electric vehicles and support the implementation of additional charging infrastructure. All this good work will be for nothing if the demand side of the equation is not equally incentivised.

“Our members are facing uncertainty with a disorderly transition to these new arrangements. As around 50% of new vehicles are registered by BVRLA members every year, including approximately a third of all new electric and plug in hybrid vehicles, our members have a massive stake in this market. The Government must honour all orders made before the cut-off date of 9th November to ensure fleet operators are not unfairly penalised by yesterday’s news. We stand ready to work with OLEV to ensure this happens.

“We are calling on the Government to rethink this decision as a matter of urgency. The plug-in grant, together with our calls for the leveraging of the company car tax within this month’s Budget, would actively encourage motorists to make less polluting vehicle choices. Not doing so puts the Road to Zero ambitions in real jeopardy.”

Tim Porter, Managing Director for Lex Autolease: “For the government’s Road to Zero targets to be achievable, we need to see almost a 23-fold increase in Ultra Low Emission Vehicle uptake, and incentives like the Plug-In Car Grant are key to making this possible.

“While the grant for Zero Emission Vehicles will continue – albeit with smaller contributions available for drivers – the 2030 target relates to both Ultra Low and Zero Emission Vehicles. This means there is still a role for plug-in hybrids to play which is key, given there are also still relatively few Zero Emission Vehicles on the market.

“Product and infrastructure availability aside, plug-in vehicles can be seen as prohibitively expensive for many, and incentives are an important way of making them more accessible and appealing. At the recent Zero Emission Vehicle Summit we announced a £1m fund which will offer contributions of £1,000 towards the first 1,000 pure electric vehicle orders placed with us from January 2019 – we are pleased to be going some way to make up the shortfall and supporting UK drivers to achieve 25 million more zero emission miles in the next five years.”

LeasePlan’s Matt Walters, Head of Consultancy and Customer Data Services comments: “This is a double edged sword for the industry. The lack of warning the Government has given us means the whole industry is on the back foot. The government have been clear that there is a transitional fund for both grant types and if the pot is empty then the grant will not be applied. Putting the customer at the centre of our thinking, we now need to consider how best we provide clarity at the point of selection as to how we represent a value that may or may not exist in the run up to the 9th November. However, we welcome the news that orders placed before this morning’s announcement will still have full grant status.

“On the other hand, it seems there are some positives – the scheme is being extended into the next decade is good news as it continues to encourage drivers to go green. We are now in the second phase of encouraging people to adopt electric vehicles, and this announcement signals that the Government is taking the road to zero seriously. The initial grants stimulated strong demand with early adopters, and it was right that they were rewarded for their decisions. However, it didn’t necessarily encourage the right behaviours. We know that many drivers still use the petrol function on their hybrids – which doesn’t benefit the environment in any way; so actually, the Government’s changes means they’re targeting a behaviour change in motorists, to really accelerate the road to zero. This is ultimately a good move as it should drive a consistent, environmentally beneficial attitudinal shift, even if it now means fewer vehicles will be eligible for grants.

Matt Dale, Head of Consultancy, ALD Automotive, comments: “Yesterday’s 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.”

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