Electric car grant - everything you need to know
The Government's plug-in car grant gives electric car buyers an automatic discount of £2500. We explain how it works and which cars are eligible...
The plug-in car grant (PICG), also known as the electric car grant, is available to buyers of eligible cars, vans and motorcycles, and is administered by the Office for Low Emission Vehicles (OLEV).
It was introduced in 2011 to encourage people to switch from petrol and diesel cars by reducing the cost of electric and plug-in hybrid models. Lower road tax (VED) and company car tax have also been introduced for the greenest vehicles, and these two initiatives are part of the Government’s target of reaching zero emissions by 2050.
What is the electric car grant?
The electric vehicle (EV) grant is a subsidy on new zero-emissions vehicles and is intended to bring their prices down to a level that is closer to the cost of buying a conventional petrol or diesel alternative.
The battery electric technology that powers EVs makes them more expensive to produce than cars with conventional engines and the grant is a way of reducing their cost for buyers. According to the Government, it has so far contributed £1.3bn towards purchases of around 285,000 plug-in vehicles.
How much is the electric car grant?
When it was first introduced, the PICG provided up to 35% off the list price of a new plug-in hybrid or pure electric vehicle up to a maximum of £5000.
In 2018, the maximum amount payable was cut to £4000 and plug-in hybrids were excluded from the grant, which was only available for zero-emission cars with a pure electric range of 70 miles or more.
The grant has been reduced by £500 each year since then, and on March 18, 2021 it dropped to £2500, half the original incentive. There is now a price cap of £35,000 on the list price of eligible cars – before March 18, the payment was available on cars costing up to £50,000.
According to the Government, the latest reduction was announced to "reflect a greater range of affordable vehicles available" and help the funding go further as more drivers make the switch to electric cars.
A spokesperson said: "This will mean the funding will last longer and be available to more drivers. Grants will no longer be available for higher-priced vehicles, typically bought by drivers who can afford to switch without a subsidy from taxpayers."
Is the electric car grant too small?
Official figures show that demand for EVs has increased significantly in recent years, with sales of new EVs and plug-in hybrids rising from 3% of all sales in 2019 to nearly 11% in 2020. However, electric cars are still generally more expensive to buy than their conventional counterparts (around half of the new models on sale cost more than the £35,000 threshold) and price is a factor for many motorists.
Research carried out by What Car? In September 2020 revealed that the availability of the plug-in car grant would influence the buying decisions of more than half of potential EV buyers.
Our research, involving 12,029 in-market car buyers, found that 59% were considering buying an electric or hybrid vehicle as their next car, but that cost remained a concern for 27% of them.
The latest reduction in the grant has been widely criticised by many in the motor industry, including the Society of Motor Manufacturers and Traders (SMMT), which has cited it as "the wrong move at the wrong time".
The SMMT’s chief executive, Mike Hawes, said: “Cutting the grant and eligibility sends the wrong message to the consumer, especially private customers, and to an industry challenged to meet the Government’s ambition to be a world leader in the transition to zero emission mobility.”
Which models are eligible for the electric car grant?
The PICG makes some popular electric car models, such as the Kia E-Niro and our favourite small EV the Volkswagen ID.3, more affordable, because both can be bought for less than £35,000. However, it is not applicable on many premium-badged models, including all Audi and Mercedes EVs and all Teslas, including the Model 3, which has consistently been the UK’s best-selling EV.
In response to the latest cut in the PICG, Citroen reduced the price of the most expensive Shine Plus trim level on its new electric SUV, the e-C4, by £550 so that it still qualifies for the grant.
Here’s our list of the cars that are eligible for the electric car grant:
How do I get the electric car grant?
If you’ve chosen an eligible vehicle, you do not need to do anything to get the grant. The car dealer that supplies the car will complete the necessary paperwork to apply for the payment on your behalf and you will get it in the form of an automatic discount off the price.
When will the electric car grant stop?
The Government has pledged to keep offering the incentive to new car buyers until 2023. It has not said whether the amount offered will be reduced further, but the fact that it has been cut every year since 2018 suggests it will continue to drop annually.
Are there other grants for electric car buyers?
Yes. Anyone buying an EV can also apply for a grant of up to £350 towards the cost of installing a home charging point. The Electric Vehicle Homecharge Scheme (EVHS) can be used to lower the cost of buying and installing a home charging point. EV owners can apply for one charge point per eligible vehicle with a maximum of two vehicles per household.
To qualify for the grant you need to own an electric vehicle with CO2 emissions below 50g/km, have off-street parking and have an OLEV-approved charger fitted. As with the PICG, the paperwork for the EVHS grant can be done by the charge point supplier.
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