Thursday, March 18, 2021

UK Government Makes Radical Changes to Electrically Driven Vehicle Grant Scheme

But What Has This Got for the Haulage Operator?
Shipping News Feature

UK – Whilst the government announced today that it is to update the grant scheme for electric cars, vans and trucks with immediate effect, the language of the announcement provides little clarity for the road haulage operator who would wish to reduce emissions by switching part or all of their fleet.

The position on cars is that now grants of up to £2,500 are available for cars up to £35,000 in value. However the changes are aimed at lengthening the amount of funding available by discontinuing grants for higher-priced vehicles, typically bought by drivers who can afford to switch without a subsidy from taxpayers.

The plug-in vehicle grant scheme was renewed last year, with £582 million of funding intended to last until 2022 to 2023 and the number of electric car models priced under £35,000 has increased by almost 50% since 2019, with more than half the models currently on the market still eligible for the grant.

Introduced a decade ago, the scheme has had to evolve as batteries have become ever more efficient and costs have fallen. Since 2011, the government has provided close to £1.3 billion in plug-in vehicle grant funding to bring ultra-low emission vehicles onto UK roads, supporting the purchase of more than 285,000 vehicles.

Numbers of electric vehicles have grown from 3% of the market in 2019, to almost 11% by the following year. There is however a paucity of information for the commercial vehicle operator looking to benefit. What is needed is more clarity from government as to how it proposes to make the vehicles more appealing financially to hauliers. Announcing the changes, Transport Minister Rachel Maclean said:

”We want as many people as possible to be able to make the switch to electric vehicles as we look to reduce our carbon emissions, strive towards our net-zero ambitions and level up right across the UK. The increasing choice of new vehicles, growing demand from customers and rapidly rising number of charge points mean that, while the level of funding remains as high as ever, given soaring demand, we are refocusing our vehicle grants on the more affordable zero emission vehicles. We will continue to review the grant as the market grows.

”We have been clear since 2018 that we intend to reduce the plug-in car grant. We are retaining support for the switch to electric vehicles through other new investments. Today’s changes are the latest step in this. Generous tax incentives, including favourable company car tax rates, which can save drivers over £2,000 a year, will remain in place.”

The announcement clearly left Logistics UK unimpressed by the changes, with Head of Public Policy Michelle Gardner commenting:

“Switching to zero and ultra-low emission vehicles is an important focus for the logistics industry, as it works to achieve the government’s zero emissions target by 2050. It is therefore disappointing to see the changes announced today to the government’s plug in car, van and truck grants, which have been reduced for the vast majority of available models.

”Logistics UK’s members are committed to making the switch to alternatively fuelled vehicles, but with the market still to reach maturity, options are limited for operators and reducing the financial support will hinder this transition. After the financial impact of the Covid-19 pandemic, to enable operators to make a change within the lifecycle of their normal vehicle, it is imperative that government lays out a clear policy road map to enable operators to invest confidently, while encouraging manufacturers to develop and launch a wider range of suitable vehicles.”

To claim, commercial vehicles must be newly built, capable of at least 50mph and covered by a lengthy extendable warranty, with full details of who can claim and how given in a government guidance document.

Photo: The Ford the 2022 E-Transit, the latest edition of the original iconic ‘white van man’ vehicle.