In a bid to encourage the switch from ICE to EV, drivers in the UK can now save on a range of EVs – see below. The discount applied is either £3,750 or £1,500, depending on the vehicle’s sustainability and eligibility. This new electric car grant (ECG) aims to make owning and purchasing an EV cheaper for thousands of people across the UK.
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To be eligible for a grant, the vehicle must:
- be a passenger vehicle
- produce 0gCO2/km at the tailpipe
- have a minimum battery range of 100 miles (160km)
- have a 3-year or 60,000 mile warranty, whichever is reached first
- be powered by a battery with an 8-year or 100,000 mile warranty, whichever is reached first
- meet minimum sustainability criteria
There are two possible discounts available depending on which band the car is in.
Band 1 cars
The maximum discount available for cars assessed as Band 1 is £3,750.
The eligible vehicles are:
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- Ford Puma Gen-E
Band 2 cars
The maximum discount available for cars assessed as Band 2 is £1,500.
The eligible vehicles are:
- Citroën ë-C3 and Citroën ë-C3 Aircross
- Citroën ë-C4 and Citroën ë-C4 X
- Citroën ë-C5 Aircross
- Citroën ë-Berlingo
- Citroën ë-SpaceTourer
- Cupra Born
- DS DS3
- DS N°4
- MINI Countryman Electric
- Nissan Ariya
- Nissan Micra
- Peugeot E-208
- Peugeot E-2008
- Peugeot E-308
- Peugeot E-408
- Peugeot E-Rifter
- Peugeot E-Traveller
- Renault 4
- Renault 5
- Renault Alpine A290
- Renault Megane
- Renault Scenic
- Skoda Elroq
- Skoda Enyaq
- Toyota bZ4X
- Toyota Proace City Verso
- Vauxhall Astra Electric
- Vauxhall Combo Life Electric
- Vauxhall Corsa Electric
- Vauxhall Frontera Electric
- Vauxhall Grandland Electric
- Vauxhall Mokka Electric
- Vauxhall Vivaro Life Electric
- Volkswagen ID.3
- Volkswagen ID.4
- Volkswagen ID.5
See this link to UK Government website for latest eligibility list: https://www.gov.uk/plug-in-vehicle-grants/cars
We spoke to Mike Thompson, chief operating officer, Leasing Options Ltd, to learn more about the new UK electric car grant and what it means for the leasing industry.
Just Auto (JA): Could you provide some background on the company?
Mike Thompson (MT): The company is 35 years old; we have been primarily focusing on contract hire vehicles. The founder was working in the industry whilst he was primarily working with large fleets, he saw an opportunity to also include smaller businesses and bring in a wider market over time.
We’ve now grown to provide around 15,000 new cars a year on contract hire. We do personal and business contract hire. We facilitate deals by committing to a large discount with a manufacturer, and then we find (from a panel of 16 funders) the best deal for the end-user. We then put that deal together, package it, and bring it to the customer.
How does the electric car grant (ECG) criteria impact EV leasing and EV purchasing?
Where people are doing PCP leasing, they are paying the difference between original price and the residual value. So, if at first you get over GBP1,500 off, that means that the original price has gone down, so you’re nearer the residual value. The banks say: “That’s now GBP1,500 cheaper” so they just reduce the residual value by the same amount. It doesn’t have much impact on the rental, so we’ve not seen a growth or an uptake from a leasing perspective.
When I’m talking to peers across the industry and dealers, they say that they’ve seen a slowdown in EV sales since the announcement. Part of that is people waiting to see what happens. People have a perception that there are going to be bigger discounts on rentals in time.
We always have a slight slowdown over summer but looking at it year-on-year, figures are behind on EV, but ICE has carried on, so people are still leasing ICE vehicles frequently.
I’m on the BVRLA leasing committee, we think it should have been a grant on used cars.
As it stands, it could be used by some manufacturers in place of them being competitive in a discount – a substitution effect.
The problem in the market is the residual values are so low. Most people who are financing a vehicle, either for business or personal, are utilising some sort of funding to be able to afford a GBP30,000 vehicle. In that scenario, the residual value is huge and very important. If we’d protected the residual value by raising the used cars by GBP1,500, that would have made demand greater for the used vehicles. The residual values would have then been stronger, which would have helped the new EV residual values, which would have helped consumers get a lower rental. We just want the consumer to be able to afford the vehicle.
However, I think the motives are probably right because I think what they’re trying to do is give confidence and support to the manufacturers.
What does it mean for customers – has there been some confusion?
I was with Nissan and their team who were going through the submission that they’ve managed to get in. It’s so difficult, they were saying; “What’s the provenance of this bolt? Where’s the steel come from that makes this bolt?”
It is very confusing for the manufacturers, and difficult to submit. What they are trying to do is back those manufacturers that are cleaner and British or certainly have the right motives in Britain. I get where they were trying to come from at a high level, but I don’t think they’ve considered the full implications and benefit to the consumer.
Then for consumers, they’re trying to get their heads around it.
I’ve had consumer feedback from staff that we’ve got consumers saying: “I’ve done a quote on an EV, and I am giving you, GBP2,000 as my initial discount, but now I only give you GBP500.” and we say it doesn’t quite work like that. Their perception is that we are taking off GBP1,500, but that’s not the way it’s done.
However, the inquiry level has gone up; people are seeing it on the news and wanting to find out about it, but the order take has gone down.
What impact do you see the grant having long-term and short-term?
I think there’s going to be continued growth and adoption of new brands. With new entrants, we’re seeing a lot of interest in smaller vehicles – they are very popular. I think once more brands bring the smaller EVs to market, range anxiety is going to separate into two levels.
I think you’ve got people who are happy to have the smaller range with small vehicles, then for people with big range anxiety you will start getting these large vehicles with super batteries. You then have two levels of vehicles within all manufacturers, the big car that can do 500 miles, as well as your 150-200 mile range car, obviously at a much lower cost. People are seeing that separation, and the brands are starting to identify that.
Looking at the new entrants in particular, they are coming at price point that will drive adoption, I see adoption growing.
We have seen a huge growth in plug-in hybrids (PHEVs). We’re finding consumers where they’re taking a PHEV, even on a personal contract, and they’re using the 50 miles locally on battery. They then think ‘hang on the benefits of EV are great, and I don’t use the ICE engine that much, so why am I lugging it around with me?’ I think that will be a driver.
I do see another uptake, another wave of adoption coming, as well as the fact, obviously, within legislation, we’ve got to get there with the mandate. I do feel that the public are getting there now. What the government have done alongside the ECG, they have invested in the network, there’s money going into that, and that’s what it needed as well, and we welcome that.
We’ve seen strong discounts from Chinese manufacturers since the EV ruling, in place and to compete with the OEMs where grants have been applied. This has brought further competition to the space and a strong amount of great value lower cost deals in the market currently across EV and PHEV.
