UK government electric-car grant to be extended

Budget 2020 document confirms an extension of the Plug-in Car Grant (PiCG) to the 2022-23 financial year, albeit with a £500 reduction

The UK government Plug-in Car Grant (PiCG) is set to continue until at least the 2022-23 financial year. The news came as part of the 2020 Budget announcement on 11 March and follows in the wake of plans to ban the sale of new petrol and diesel cars by 2035.

While Chancellor Rishi Sunak mentioned wider incentives to make low-emissions vehicles cheaper to buy in his announcement in the House of Commons, exact details were given in an accompanying document.

The 2020 Budget confirms that the PiCG will continue to 2022-23 thanks to a £403 million investment, along with a £129.5 million allocation for the continuation of the Plug-in Van, Plug-in Taxi and Plug-in Motorcycle grants over the same period.

However, the PiCG will be reduced by £500 to £3,000 going forward and is now set to exclude electric cars costing £50,000 or more. The Government has stated that these changes “will allow more drivers to benefit from making the switch [to zero-emissions cars] for longer.” The new rules come into effect immediately on Thursday, 12 March.

Another significant Budget 2020 measure sees cars that qualify for the PiCG – i.e. all purely electric cars – exempted from the usual £320 road-tax surcharge on cars with a list price of over £40,000. 

The Plug-in Car Grant (PiCG) and its importance

The grant, which provides £3,500 off the purchase price of electric cars, was set to end by default in March 2020. Fears that it would end have now been put to rest, at least for the next few years.

Speaking to our sister title Auto Express in the lead-up to the Budget announcement, George Freeman, the Department for Transport's Future of Transport Minister, said that the grant was originally only intended "to kick-start the early market for electric vehicles, and funded over 200,000 electric vehicles, including pure electrics and plug-in hybrids"

Freeman referred Auto Express to figures from the Society of Motor Manufacturers and Traders (SMMT) that showed a 204% year-on-year increase in electric vehicle sales in the UK in January 2020. 

“But as prices of these cars come down, it is right that the Government ensures value for money for the taxpayer while focusing our support on zero emission models,” Freeman added.

A number of other comments had also cast uncertainty on the future of the grant. Speaking to a BBC Question Time audience, Robert Buckland, Secretary of State for Justice, suggested there may be an alternative. 

“We think there’s a better way of doing it," he said. "By scaling up the infrastructure, it means that more people will start to buy electric cars, and with that scale of demand then the price starts to come down. I think that’s the way we’re going to do this." 

However, Buckland added that he couldn’t “judge what’s going to happen in the Budget”.

In late 2018, the government brought to an end the £2,500 discount available on a range of plug-in hybrid (PHEV) cars, while the £4,500 discount available on most electric cars was reduced to £3,500 – the figure that now remains unchanged until 2022-23.