Price reductions

Government confirms £5,000 Plug-in Car Grant for electric car buyers

The coalition government has confirmed that it will pay an incentive of £5,000 to car buyers when they purchase a pure electric or plug-in hybrid electric vehicle.

The Plug-in Car Grant will reduce the retail price of eligible vehicles by 25 per cent, capped at £5,000, which effectively means that all electric and plug-in hybrid cars will qualify for the full £5,000 payment. It will come into effect on 1st January, 2011.

To qualify for the grant, vehicles must be eligible.

The Plug-In Car Grant eligibility criteria

• Vehicle Type: New cars only (‘M1′ category vehicles, this includes pre-registration conversions) ie excluding motorcycles, quadricycles and vans.
• Carbon Dioxide tailpipe emissions: Less than 75g/km.
• Range: EVs minimum 70 miles, PHEVs minimum electric range ten miles.
• Minimum top speed: 60 mph.
• Warranty: Three year or 60,000 miles vehicle warranty, plus a three year battery and electric drive train warranty with a consumer option for a two year battery warranty extension.
• Battery performance: Either a minimum five year warranty on the battery and electric drivetrain as standard OR additional evidence of battery performance to illustrate reasonable performance after three years of use.
• Electrical Safety: Vehicles must comply with UN-ECE Reg 100 (PHEVs will be required to show they have met the technical requirements of 01 series amendments to UN-ECE Reg 100); vehicle manufacturers will be required to identify risks associated with vehicle use and state mitigating actions.
• Vehicle crash safety: European Commission whole vehicle type approval (EC WVTA, not small series) OR evidence that the car demonstrates appropriate levels of safety as judged by international standards.

Full details of these eligibility criteria will be published shortly at www.dft.gov.uk/olev.

The level of the Plug-In Car Grant has been agreed until 31 March 2012 and will be reviewed in January 2012. After taking into consideration a number of key factors such as the costs of vehicles and the development of the early market, the level will then be set for subsequent years. £43m has been made available up to the end of March 2012. The final budget beyond 2011/12 will be confirmed at the spending review.

Effect of the Plug-in Car Grant

Buyers will now be much more likely to be tempted into one of these ultra-low carbon cars if they are paying £5,000 less than the retail price. In the case of the all-electric Nissan Leaf, for example, which launches in the UK in February 2011, it means that the retail price will reduce from £28,990 to £23,990 – a much more attractive purchase proposition. It brings the Leaf into hybrid Toyota Prius territory – at just £3,725 more than the Prius, the Leaf offers zero emissions and much lower running costs.

Announcing the price some months ahead of launch, means that potential electric car buyers can make their purchase decision based on a long gestation period when they can weigh up all the pros and cons of electric cars. As soon as the government confirmed the buyer subsidy, Nissan announced the retail price of the electric Leaf and will start to take orders in September for delivery after the February 2011 launch date.