EV buyers encouraged to place orders before end of February

Car buyers wanting to purchase a plug-in hybrid electric vehicle (PHEV) should be aware that some OTR prices may increase from 01 March 2016 due to new grant levels coming into effect in the new financial year.

The prices changes are due to forthcoming changes to the Plug-in Car (and Van) Grants (PiCG). From 01 March 2016, two new grant rates will be introduced with the level of subsidy for PHEVs falling by 50 per cent from a maximum of £5,000 to £2,500. All-electric models may also be affected, although to a lesser extent than for PHEVs, with the PiCG for full EVs reducing by £500 to a maximum of £4,500.

The new PiCG rates will be awarded using a new EV classification system, each EV being classed depending on the level of CO2 emissions and the EV-only capable range.

• Category 1: CO2 emissions <50g/km and a zero emission range of at least 70 miles
• Category 2: CO2 emissions <50g/km and a zero emission range between 10 and 69 miles
• Category 3: CO2 emissions of 50-75g/km and a zero emission range of at least 20 miles

Category 1 vehicles will benefit from the full £4,500 grant while Category 2 and 3 vehicles will receive £2,500. The current grant scheme will run until March 2018 or until a certain number of each grant has been awarded.

A price cap will also be introduced in March 2016. Category 2 and 3 models with a list price of more than £60,000 will not be eligible for the PiCG, though all Category 1 vehicles will be able to have the full PiCG no matter what their cost.

It is the case that some manufacturers may chose to absorb the additional costs due to the reduced subsidies. Indeed, Mitsubishi have made a point to date of pricing the Outlander PHEV at the same price as the diesel version. Hyundai has announced a similar policy with the forthcoming launch of the Ionic PHEV at the Geneva Motor Show in March.

However, in general, UK car buyers should expect PiCG-eligible PHEV prices to increase by at least £2,500 from 01 March this year. More expensive models will see their OTR prices increase by a greater degree if their OTR fall over the new £60,000 threshold.

Leasing prices will also be affected. Next Green Car partners GKL Leasing are forecasting monthly increases in business premiums of at least £90+VAT from March 2016 and are encouraging potential customers to place orders by the end of February to secure the offers based on the current grant.

Alongside the PiGC, the government has announced it will continue the Electric Vehicle Homecharge Scheme - though at a reduced cost. Plug-in car buyers will now get £500 towards the cost of installing a charging point at their home, rather than the £700 maximum.

Click here for our EV car buying guide »

Ben Lane

Author:Ben Lane
Date Updated:26th Jan 2016

Related news