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The Plug-In Car Grant (PICG) provided by the Government since 2011 has been a resounding success. Paid directly to car dealers, the grant has allowed them to discount the purchase price of plug-in hybrid vehicles, such as the Mitsubishi Outlander PHEV and pure electric vehicles, such as the Nissan Leaf.
On 11th October 2018, the Government announced a number of changes to the Plug-in Car Grant (PICG).
The PICG was designed to stimulate the plug-in vehicle market. In a sense it has become a victim of its own success, with plug-in hybrids and pure electric vehicles well-established in the mainstream. As a result, the Government has chosen to remove the subsidy for plug-in hybrids and focus on solely funding pure electric vehicles instead.
The Department for Transport chose to implement the Plug-In Car Grant changes earlier than expected, following exceptional demand for electric and hybrid vehicles under the existing grant system. The Plug-In Car Grant now only funds pure electric vehicles which are eligible for up to £3,500 of subsidy, while plug-in hybrids no longer qualify.
Despite this reduction in subsidy, plug-in hybrid and electric vehicles are still a positive choice for private users and fleet managers as an alternative to petrol and diesel cars.
Plug-in hybrid and electric vehicles remain among the cleanest vehicles on the road. The initial purchase grant may have changed but they will continue to receive financial support through lower road tax rates, grants for charging infrastructure and local incentives, such as free parking.
Running costs are likely to be lower for plug-in hybrid and electric cars too. A pure electric vehicle can make a journey of 100 miles for as little as £2 - £4, considerably less than a petrol or diesel equivalent, which will cost £13 to £16 in fuel.
It’s not only the daily running costs that are lower. Charges for maintenance and servicing tend to be lower in electric vehicles as well, thanks to their having fewer mechanical components than in a traditional petrol or diesel car.
The range of electric vehicles is increasing as well, with improvements to battery technology. This, combined with a commitment to increase public charging points, mean that range anxiety should soon be a thing of the past.
The growth of clean air zones and awareness of air pollution adds to the motivation to choose a plug-in hybrid or electric vehicle. Cities throughout the UK are restricting the use of traditional petrol or diesel vehicles, in an attempt to improve air quality. Some local authorities are contemplating an outright ban on petrol and diesel vehicles, while others have introduced congestion charging.
Currently, plug-in cars emitting 75g/km of CO2 or less are eligible for 100% discount from the London Congestion Charge – that’s a potential saving of over £2,000 a year for a regular user.
Finally, there’s the question of longevity. The Government has committed to ensuring all new vehicle sales will be of zero emitting vehicles by 2040 in its Road to Zero Strategy. The transition towards zero emission road transport has already begun.
Demand for petrol and diesel cars and vans is set to fall over the coming years, as the move towards zero-emitting greener vehicles picks up speed. This is going to affect the resale value of petrol and diesel vehicles too.
It makes sense to look to the future when purchasing a new vehicle, irrespective of grants from central government. Plug-in hybrid and electric vehicles are that future.