Complete guide to the plug-in electric car grant

Article William Morris
Mar 2, 2016

Revised grant scheme sees £5,000 subsidy scrapped by the Government

An important factor in the growing number of ultra low emission vehicles (ULEVs) on UK roads has been the Government's grant scheme, which was set up in 2011 to encourage people to buy the greenest cars on the market.

Significant changes to the plug-in car grant scheme came into force on 1 March 2016. The amount available for qualifying cars was reduced and efficiency categories were introduced to create tiers within the scheme so that cars that would previously have been eligible for a £5,000 grant now only qualify for £4,500 or £2,500.

In Q4 of 2011, the first year the grant was available, there were 109 claims on the scheme but in the same period of 2015, there were 8,453. This jump is partly because there are many more qualifying ULEV models available, with more people looking to buy one of them. This led the Government to reduce the amount it contributes per car in order to continue the scheme until at least 2018.

The changes also recognise that there is a range of efficiency among qualifying cars. The more efficient models now receive higher grants to encourage buyers to buy the very greenest cars.

Three categories have been established to distinguish between the levels of efficiency. Category 1 cars are eligible for the £4,500 grant, while cars in categories 2 and 3 will be eligible for the £2,500 grant. In addition, category 2 and 3 cars that cost more than £60,000 will no longer be eligible for a grant at all. You can see how the categories are determined and which categories qualifying cars fall into further down the page.

Despite the reduction in the grant, driving a low emissions car still has the same potential to save you money in the long term. With the full charge of an electric car costing a tiny fraction of what you'd pay to fill up a normal car with petrol or diesel, it's easy to see why more electric vehicles are appearing on our roads, regardless of the grant. In fact, recent forecasts from Go Ultra Low (a Government-backed initiative to promote electric cars) predict that by 2027, over half of all new cars sold in the UK will be electric.

One of the main drawbacks of buying a low emissions car is undoubtedly the cost of buying one – even a small model can cost more than £20,000. That's why the Government originally introduced a grant, and why it wants to continue offering assistance to buyers of electric, hydrogen and hybrid buyers in the immediate future.

The grant, combined with environmental concerns and a rapidly expanding selection of ULEVs offering both private and fleet buyers more choice if they want to switch to greener cars, has led to an all-time high in sales of this kind of vehicle. In the first quarter of 2015, a year-on-year increase of a whopping 386% was recorded. The Government is unlikely to offer a grant on ULEVs forever, so it'll still be worth taking advantage of the scheme in its revised form after 1 March.

The scheme covers electric cars, plug-in hybrid models and hydrogen cars such as the Mitsubishi Outlander PHEV, Toyota Prius Plug-in, Vauxhall Ampera and Toyota Mirai

See the full list of eligible cars

The grant is automatically deducted from the price of the car when you buy it. The dealership completes the paperwork, so there are no application forms to fill in, but you may be asked to complete a short questionnaire.

Purpose of the plug-in grant scheme

The 2008 Climate Change Act set the UK a target of reducing its greenhouse-gas emissions by 80% (compared to 1990) by 2050. There are various areas the Government is looking at to achieve this figure – one of which is transport.

Transport accounts for around 25% of the UK's CO2 and other greenhouse-gas emissions. Improving the efficiency of the vehicles on our roads therefore forms an important part of the Government's overall strategy to drastically reduce UK greenhouse-gas emissions. Doing so also reduces the amount of nitrogen oxide (NOx) pollution, which is damaging to public health on a more local scale.

ULEVs, including electric, plug-in hybrid and hydrogen-powered cars, produce, on average, significantly less greenhouse gases than those running on petrol or diesel. To encourage people to buy them, the Government invested in grants and infrastructure to make them cheaper and more practical to own.

In a ULEV strategy paper produced by the Office for Low-Emission Vehicles, the Government states that its vision is "clear and hugely ambitious – to see a UK car fleet with effectively zero emissions by 2050." It's very unlikely that this target will change, even if the party in government does.

ULEVs are only likely to get cheaper and easier to use as the technology becomes fine-tuned and more widely used. Conversely, cars that run on fossil fuels are only likely to get more expensive to run thanks to finite oil supplies and heavier taxation.

See which models make up our top ten hybrid cars

Over 50,000 people have benefited from the grant scheme as since it began. If you want to join them and switch to ULEV technology for your next car, read on to find out exactly how the scheme works in its latest form.

Electric car grant eligibility

It's up to manufacturers to submit a formal application for a model they believe is eligible for the subsidy – it's not left to you to work out which cars qualify. Obviously, it's in the interest of the manufacturers to do this, as the grant represents an attractive customer discount on one of their own models that they don't have to pay for. For peace of mind, it's worth knowing what the qualifying criteria are.

  • • Cars must be new
  • • Cars must produce less than 75g/km of CO2
  • • Electric vehicles must be capable of 70 miles or more on a single charge and plug-in hybrids must be capable of travelling 10 miles or more purely on electric power
  • • Cars must be capable of at least 60mph
  • • Cars must have a three-year/60,000-mile warranty, a three-year battery and electric drivetrain warranty with the option of extending the battery warranty by two years, and in some cases extra evidence that the battery will 'perform reasonably' after three years if a five-year warranty isn't offered
  • • Certain standards must be met regarding electrical and crash safety

Changes to the electric-car grant scheme

In its previous form, the plug-in hybrid electric car grant was offered as a 35% discount off the basic price of an eligible car with a £5,000 cap. That invariably meant qualifying cars received the full £5,000. Due to the prevalence of qualifying cars and their increasing popularity, changes were made to keep the scheme sustainable.

Electric and hybrid technology has come on in leaps and bounds since the grant scheme was introduced in 2011 and the number of different models available has increased dramatically too.

The Government realised this and introduced three categories to distinguish between the varying levels of efficiency among the cars that qualify for the scheme. Introducing this system also meant the Government continued to offer some form of grant, with the same amount of funding, compared to continuing the scheme in its previous guise.

The categories are used to stagger the amount of money you can receive as a grant. This was done with a view to encouraging buyers to choose not just a ULEV, but one of the most efficient on the market.

  • • Category 1: CO2 emissions of less than 50g/km and zero-emission range of at least 70 miles
  • • Category 2: CO2 emissions of less than 50g/km and zero-emission range of 10-69 miles
  • • Category 3: CO2 emissions of 50-75g/km and zero-emission range of at least 20 miles

The Government announced in December 2015 that the grant scheme will continue until at least 2018 but the way it works was to change; the three new categories above, as explained, are instrumental in that. The changes mean that now, cars in category 1 are eligible for a £4,500 grant, while cars in categories 2 and 3 are eligible for a £2,500 grant, rather than the £5,000 buyers could claim previously.

In addition, category 2 and 3 cars that cost over £60,000 are no longer eligible for a grant at all.

Cars eligible for the electric car grant

The cars currently listed as eligible on the Government's website for the scheme now fall into the following categories. Either some or all variants of the models marked with asterisks now fall foul of the new rule that cars must be under £60,000 to qualify for a grant:

Category 1

  • · BMW i3
  • · BYD e6
  • · Citroen C-Zero
  • · 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 ZOE
  • · Tesla Model S
  • · Toyota Mirai
  • · Volkswagen e-up!
  • · Volkswagen e-Golf

Category 2

Ineligible vehicles

Cars that fit in category 2 or 3 that have a recommended retail price of more than £60,000 aren't eligible for the grant. These include: