Prices of electric and plug-in hybrid cars are set to rise by thousands of pounds after the government reviews its plug-in grant.
The government has announced that the plug-in grant for zero and low-emission cars is being cut – raising the cost of these cars.
From 9 November 2018, consumers will see the grant for electric cars fall from £4,500 to £3,500. Electric cars can be expensive, and Which? data shows that it could take three-and-a-half years to recoup the lost £1,000, against a comparable diesel car.
Zero-emission cars that cost more than £60,000 (such as the Tesla Model X and Toyota Mirai) may no longer qualify for the grant at all, increasing their cost by as much as £4,500.
Meanwhile, plug-in hybrid cars are having their grant removed completely. Hybrids tend to qualify for a lesser grant, which means their prices could rise by £2,500.
Find out which are the best electric cars for 2018.
What is the plug-in grant?
The plug-in car grant (PICG) exists to reduce the price of electric and plug-in hybrid cars (regular hybrids are not included). It was first introduced in 2011 to boost the ultra-low emission vehicle market.
How do the changes affect the plug-in grant?
Depending on the car, the price under the current scheme could be reduced by a maximum of £4,500 or £2,500, depending on the category. For category 1 cars (see below), the new plans will reduce the grant from £4,500 to £3,500.
Also under the new plans, plug-in hybrids will no longer receive the grant. So now no vehicles that currently qualify as a category 2 or category 3 car will receive the grant going forwards.
Category 1 cars – the new plans will reduce the grant from £4,500 to £3,500
These are cars that produce less than 50g/km of carbon dioxide (CO2) and can also travel 70 miles without producing any carbon dioxide (CO2) at all.
They qualify for the full grant – a price reduction of 35%, which was up to £4,500. The vehicles that qualify are mostly fully electric cars, but also include the hydrogen fuel cell Toyota Mirai.
Category 2 cars – will no longer receive the grant from 9 November 2018
These are cars that produce less than 50g/km of CO2, and can travel 10 miles without producing any CO2.
The grant for them reduces the price by 35%, up to a maximum of £2,500. The majority of plug-in hybrid cars fall into this category.
Category 3 cars – will no longer receive the grant from 9 November 2018
These cars are very similar to category 2 cars. They can produce from 50-75 g/km of CO2 and travel 20 miles while producing no CO2. These cars also get a price reduction of 35%, up to £2,500.
How long will it take me to get the money back?
To find out, we looked at the running cost of the current Nissan Leaf (2018-) as an example. We plotted the running costs against an average of petrol and diesel cars from the same car class.
The Nissan Leaf is an electric vehicle that qualifies as a ‘category 1’ car – this means that the grant it qualifies for is £1,000.
Looking at running costs alone, we found that it will take one year and nine months to save £1,000.
A statement on the Department for Transport’s website said: ‘For the last seven years, the PICG has provided a discount to the price of over 160,000 new ultra-low emission vehicles.
‘These changes reflect the ongoing success of the PICG in increasing uptake of electric vehicles […] The government will now focus its support on zero emission models like pure electric and hydrogen fuel cell cars.’
The Department for Transport also said that plug-in hybrid vehicles would ‘continue to receive support through lower car tax rates, grants for charging infrastructure and local incentives such as free parking.’
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