Plug-in car grant extended in the UK – but is it time to SCRAP it?

The grant for Ultra Low Emission Vehicles (ULEV) – which offers up to £5k off a qualifying car – has been extended until February 2016, pending review.

The grant the taxpayer divvies up for anyone buying an Ultra Low Emissions Vehicle (ULEV) – the plug-in grant – was likely to run out in November as sales of ULEVs grow, but the government has decided to extend it under its current setup until February 2016, pending a spending review in November.

That means you can buy a ULEV for the next six months and get up to 35 per cent off (subject to a maximum grant of £5k) which, supporters of the system say, is driving sales of ULEVs, with as many sold in the first six months of 2015 as in the whole of 2014. But is it?

Is it just a coincidence that the best-selling (by far) ULEV – the Mistubishi Outlander PHEV – is priced at exactly £5k below its diesel counterpart? And does the grant really make buyers opt for a ULEV rather than an ICE car, or is it just a bonus enjoyed by those who’ve already decided they want a ULEV?

The only way to find out is to drop the plug-in grant, and we’re convinced the big driver for the Outlander PHEV sales is the very low BIK rate company car drivers enjoy – saving them thousands of pounds a year – and not the £5k ‘saving’.

And if the plug-in grant went, would car makers simply reduce their prices to compensate? Nissan are already pumping the LEAF out with big discounts from the list price – as are other EV makers – so it seems highly likely that’s what would happen to keep the market moving.

Transport Minister, Andrew Jones MP said:

I’m pleased to announce today that the government is maintaining the current levels of grant, even as we move past the milestone of 50,000 vehicles.

The UK is now the fastest growing market for electric vehicles in Europe. We will continue to invest to help make this technology affordable to everyone and to secure the UK’s position as a global leader.

Frankly, this looks like a holding pattern for the plug-in grant, with a proper announcement on its future only likely after a spending review in November. Basing taxation on CO2 emissions is barking anyway, but subsidising early adopters – when the subsidy may not actual help the market grow – has always seemed a mistake.

Perhaps the government should be brave and scrap the plug-in grant altogether?