Ultra-green car grant cut

Drivers have only one weekend left to get a £5,000 discount on an ultra-green car.

From 1 March 2016 the maximum subsidy available to purchasers of the greenest cars will be cut from £5,000 to £4,500 as ministers reduce taxpayer support for each vehicle sold.

As part of the overhaul of the plug-in car grant scheme, vehicles will also be divided into three sub categories depending on the extent of their green credentials. For certain vehicles this will result in a maximum pay out of no more than £2,500. A few will be excluded altogether.

The plug-in van grant scheme is not set to change.

These are the new categories and the maximum grant available from 1 March:

Category 1 – CO₂ emissions of less than 50g/km and a zero emission range of at least 70 miles. £4,500 grant.
Category 2 – CO₂ emissions of less than 50g/km and a zero emission range between 10 and 69 miles. £2,500 grant.
Category 3 – CO₂ emissions of 50 to 75g/km and a zero emission range of at least 20 miles. £2,500 grant.

According to the Office for Low Emission Vehicles (OLEV) vehicles currently eligible for the plug-in car grant will fall into the following categories from 1 March:

Category 1 Vehicles

BMW i3
BYD e6
Citroen CZero
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
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*

Note: Any model or variant in categories 2 and 3 which from 1 March 2016 has a list price of over £60,000 will now be excluded from the grant scheme. Based on current pricing this would affect some or all of the variants of those models marked with an ‘*’ above.

The Committee on Climate Change (CCC) estimates that for the UK to meet its legal obligations to cut greenhouse gases by 80% by 2050 – compared to 1990 levels – 9% of the new car market should be ultra-low carbon within the next five years.

This means around 240,000 pure battery-powered cars being bought in 2020, more than 7.5 times the 31,000 vehicles sold in 2015 under the scheme.

The table below shows the number of plug-in car grant (currently worth up to £5,000 per vehicle) and plug-in van grant (worth up to £8,000) claims by quarter since launch.

Quarter	Car Claims	Quarter	Van Claims
Jan – Mar 2011	462	Jan – Mar 2011	N/A
Apr – Jun 2011	230	Apr – Jun 2011	N/A
Jul – Sept 2011	104	Jul – Sept 2011	N/A
Oct – Dec 2011	109	Oct – Dec 2011	N/A
Jan – Mar 2012	400	Jan – Mar 2012	0
Apr – Jun 2012	406	Apr – Jun 2012	99
Jul – Sept 2012	599	Jul – Sept 2012	41
Oct – Dec 2012	710	Oct – Dec 2012	75
Jan – Mar 2013	612	Jan – Mar 2013	49
Apr – Jun 2013	920	Apr – Jun 2013	46
Jul – Sept 2013	1109	Jul – Sept 2013	53
Oct – Dec 2013	1047	Oct – Dec 2013	41
Jan – Mar 2014	2015	Jan – Mar 2014	37
Apr – Jun 2014	2536	Apr – Jun 2014	196
Jul – Sept 2014	4889	Jul – Sept 2014	170
Oct – Dec 2014	5976	Oct – Dec 2014	206
Jan – Mar 2015	8558	Jan – Mar 2015	298
Apr – Jun 2015	6992	Apr – Jun 2015	251
Jul – Sept 2015	6957	Jul – Sept 2015	163
Oct – Dec 2015	8453	Oct – Dec 2015	181
TOTAL	53084	TOTAL	1906

Note: While the car grant started in January 2011 the van grant only started in February 2012

Steve Gooding, director of the RAC Foundation, said:

“Given that the market was almost non-existent just five years ago there has clearly been progress made in getting drivers to go ultra-low and manufacturers will be relieved government has decided to taper the grant rather than scrapping it completely.

“The question is whether the new grants will be enough to nudge our choice of vehicles towards the eco-friendliest options. One of the big success stories has been the Mitsubishi Outlander plug-in hybrid which currently attracts a £5,000 grant. But under the new rules that will fall to just £2,500.

“Much will depend on how manufacturers respond and whether they adapt their pricing policies.

“In many ways the big concern is the almost non-existent electric van market. This was perhaps where the greatest hope lay with expectations that urban delivery firms and local authorities, whose vehicles did known mileages and could be easily recharged at the depot overnight, would go electric.

“But for pure electric vehicles the barriers to mass-market take up have not yet fundamentally changed: range anxiety, the absence of a step change in battery technology, relatively high purchase prices and concerns over resale value.”

In documents released by the CCC before Christmas a car manufacturer is quoted as telling the committee that:

“The battery technology itself is still hugely expensive and without mass market take-up, predicted economies of scale will continue to go unrealised. Whilst legislation in the form of government targets gives OEMs [car manufacturers] direction, these should also be realistic. Many ULEVs today are sold at a loss in the expectation/hope that at some stage the market will take-off but in the current economic climate this cannot be maintained.”

The manufacturer goes on to say that the price of electric cars might actually rise in the future, not fall:

“If costs do not come down then it means OEMs will have to bear a greater burden should take-up increase and this could potentially mean prices will increase which would in turn lead to softening demand.”

ENDS

Contact:

Philip Gomm – Head of External Communications – RAC Foundation

[email protected] | 020 7747 3445 | 07711 776448 | 020 7389 0601 (ISDN)

Notes to editors:

The RAC Foundation is a transport policy and research organisation that explores the economic, mobility, safety and environmental issues relating to roads and their users.

The Foundation publishes independent and authoritative research with which it promotes informed debate and advocates policy in the interest of the responsible motorist. All the Foundation’s work is available at: www.racfoundation.org

An interactive chart showing both the quarterly and cumulative totals for plug-in car grants claims is available on the website:

http://www.racfoundation.org/data/plug-in-car-grant-claims-data-page

The embed code for the chart is:

This is a link to official details of the changes being made to the plug-in car grant scheme:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/502056/plug-in-grant-rate-changes-2016.pdf

One shopping weekend left to bag electric car bargain26 Feb 2016

Ultra-green car grant cut