The Government’s withdrawal of the Plug-in Car Grant from today has largely been slammed across the fleet and automotive sector, which says it leaves the EV sector in a fragile position.

The Association of Fleet Professionals (AFP) said it was “premature move” to axe the grant, which has had an important role in helping fleets go electric2008

Under today’s announcement by the Department for Transport and Office for Zero Emission Vehicles (OZEV), the grant process will now be closed. All existing applications for the grant will continue to be honoured, while £300m in grant funding will now be refocused towards extending plug-in grants to boost sales of plug-in taxis, motorcycle, vans and trucks and wheelchair-accessible vehicles.

The Association of Fleet Professionals (AFP) said it was a “premature move” to axe the grant, which has had an important role in helping fleets go electric. It also expressed concerns that similar moves may be made around Benefit-in-Kind taxation from the middle of the decade and said there should be a ‘soft landing’ for BiK over time.

Paul Hollick, AFP chair, continued: “Our worry is that there is a general belief among government decision-makers that the EV company car market now has sufficient momentum and can be left to its own devices.

“What the Government should note is that the impetus behind EV use by businesses is, yes, partially driven by environmental concerns but also by financial advantages. If the sums for operating EVs don’t stack up, adoption could very well slow down.”

Hollick also noted that the PiCG scheme was being closed at a time when electric vehicles of all kinds are becoming very hard to get hold of due to the chip shortage, further complicating the issue.

“Anyone ordering an electric company car today will likely not receive it for a year and could still be driving it in 2027/28. That creates a long-term financial risk for employers and drivers that is extremely difficult to forecast,” he added.

Meanwhile, flexible leasing firm Sogo Mobility said the Government had severely misjudged the situation with the removal of the grant.

Managing director Karl Howkins added: “As fleet and personal adoption of EVs start to make a meaningful impact on the UK car park, a key incentive is removed.

“Green mobility sits at the heart of Sogo and it’s our mission to help people and companies make more environmentally friendly journeys. The road to net-zero emissions still has significant hurdles for both cars and van fleet. Now is the time for additional measures to be put in place to accelerate change rather than applying the brakes.”

The closure of the PiCG had been widely anticipated although many in the fleet and automotive sectors had long said that the incentive remained vital to EV take-up.

In a statement, the Government said it had always been clear the Plug-in Car Grant was temporary and added that successive reductions in the size of the grant, and the number of models it covers, had had little effect on rapidly accelerating sales or on the continuously growing range of models being manufactured. It also noted that EV drivers will continue to benefit from incentives including zero road tax and favourable company car tax rates.

But the Society of Motor Manufacturers and Traders (SMMT) said the decision to scrap the Plug-in Car Grant sends the “wrong message to motorists and to an industry which remains committed to Government’s net zero ambition” – the forthcoming Zero Emission Vehicle (ZEV) mandate on cars and vans will place pressure on OEMs to hit increasingly stringent targets on uptake of ZEVs.

Expanding this further, chief executive Mike Hawes explained: “Whilst we welcome government’s continued support for new electric van, taxi and adapted vehicle buyers, we are now the only major European market to have zero upfront purchase incentives for EV car buyers yet the most ambitious plans for uptake.

“With the sector not yet in recovery, and all manufacturers about to be mandated to sell significantly more EVs than current demand indicates, this decision comes at the worst possible time. If we are to have any chance of hitting targets, government must use these savings and compel massive investment in the charging network, at rapid pace and at a scale beyond anything so far announced.”

The wrong move at the wrong time

The AA also said that the grant closure removed a vital incentive in the switch to EVs and could delay driver electrification.

Edmund King, AA president, outlined that the Plug-in Car Grant had been proving essential for many drivers making the switch from petrol and diesel.

“The plug has been pulled at the wrong time on this important grant before many users, still waiting for delayed EVs due to global shortages, have made the change.

“The numbers of drivers, and indeed many fleets, planning to make the switch to EV accelerated due to the rising pump price. They may now back out until they can find more cash.

“With record prices at the pumps and households’ budgets already stretched, removing the last incentive to go electric could stall this important move to electrification and helping drivers to escape the fossil-fuel-price nightmare once and for all.”

Meanwhile, the RAC pointed out that the switch to EVs is still too expensive for many drivers – even more so with the scrappage of the PiCG.

Head of policy Nicholas Lyes said: “The UK’s adoption of electric cars is so far impressive but in order to make them accessible to everyone, we need prices to fall – having more on the road is one important way of making this happen, so we’re disappointed the Government has chosen to end the grant at this point. If costs remain too high, the ambition of getting most people into electric cars will be stifled.”

And the Electric Vehicle Association England agreed that the move was too early and also pointed out that EVs have not yet reached price parity with ICE vehicles, widely expected to happen in the next few years.

EVA England CEO James Court said: “The end of the Plug-in Car Grant was signalled last year, but we hoped for a Treasury reprieve during a cost-of-living crisis, with EVs offering consumers a way of insulating themselves against sky high-petrol and diesel costs.

“However, the grant is not the only policy option, and we hope to see government implement policies that support the uptake of EVs, such as a strong ZEV mandate, reducing VAT on non-domestic charging and strengthening the charging infrastructure.

Finally, Octopus Electric Vehicles said it was important not to underplay the significance of the Plug-in Car Grant, first launched in 2011 and used since then to support the of nearly half a million EVs and hybrids.

Claire Miller, director of technology and innovation at Octopus Electric Vehicles, commented: “When the scheme started, you could fit the annual registration of electric cars in your local car park – today we’re seeing hundreds of thousands sold in just the first half of the year. Drivers are waking up to the benefits of making the switch to an EV and we’re seeing demand soar.

“It’s now over to the manufactures to meet demand with supply. Supply chain issues have led to long wait times for the latest EVs on the market. Manufacturers must do everything they can to strengthen supply at every stage to meet current and predicted demand. Without it, we’ll have more customer frustration and slower growth of the second-hand market through these crucial early years of the electric decade.”