27th November 2018

What impact might the PiCG’s significant reduction have on fleets and motorists?

Introduced in 2011, the government’s Plug-in Car Grant (PiCG) scheme was initially welcomed by the majority of motorists, automotive and environmental bodies and other voices. At face value, as a way of nudging UK drivers into greener vehicles, there was little not to like about the original PiCG1, which reduced the price of all plug-in hybrid and electric cars by £5,000 even if they were from the premium stable, such as a BMW i8 or Porsche Cayenne hybrid.

A major update five years later

Changes introduced to the PiCG in March 2016 were wholly understandable, seeking to remove this perceived loophole that enabled buyers and leasers of performance cars encompassing a token green element to enjoy the same discounts as much more environmentally-friendly vehicles2.

The scheme’s rethink saw the price of eligible ‘category 1’ new electric cars reduced by up to 35% and a ceiling of £4,500, while qualifying plug-in hybrid electric vehicles (PHEV) from categories 2 and 3 saw up to £2,500 discounted from their prices, which proved a significant boost for the Mitsubishi Outlander PHEV in particular.

Part of the government’s motivation behind 2016’s PiCG tweak was down to claims under the scheme having relatively surged, just shy of 8,500 plug-in and electric vehicles registered in Q4 of 2015 compared to3 just over 100 during Q4 of 2011.

The decision to exclude plug-in hybrid vehicles

Private motorists and fleets with an inclination to embrace greener even if not the greenest vehicles out there were still presented with a fairly worthwhile discount proposition, though. Until, that is, October 2018, when headlines like Motoring Research’s “Government pulls plug-in hybrid car grants”4 and Air Quality News’ “Plug-in grand to focus on zero emissions cars”5 left many drivers, fleets and other voices somewhat reeling.

Following over 160,000 PiCG claims, essentially meaning plug-in and electric car registrations or sales since the scheme’s launch, the DfT and the OLEV made the decision to leave all but full EVs parked out in the cold, with even eligible vehicles only now receiving a reduced £3,500 discount.

One of Whitehall’s official lines in justifying the move was that “the PiCG has helped the plug-in hybrid market become more established, and the government will now focus its support on zero emission models like pure electric and hydrogen fuel cell cars” and we can certainly appreciate this side of the debate.

After all, the expedient adoption of fully-electric vehicles is widely hailed as the aim everyone from governments and manufacturers to fleets and private motorists should be working towards to address growing climate change and air pollution fears, not to mention other societal, technological and financial shifts.

Could the move impact the uptake of green vehicles?

Some may reason, though, that while focussing exclusively on full EV adoption, the discount awarded should have remained the same for the foreseeable future, otherwise there is the risk that prospective electric vehicle purchasers and leasers may themselves back away, along with individuals and businesses whose sights were previously set on switching to popular PHEVs such as the Mitsubishi Outlander and Volkswagen Golf GTE, for example.

The BBC6 reported on condemnation to the cuts, with the SMMT calling the move ‘astounding’ and the AA and RAC labelling it a ‘backward step’, while leasing brokers including Vehicle Consulting described the decision as ‘inevitable’ in Fleet News7, on the premise that the PiCG never represented a ‘limitless pot of gold’, with restrictions openly placed on the total volume of registrations and the scheme’s duration.

Taking the real picture into account

The assertion that the PiCG was subjected to abuse over the years also holds some sway, the experiences of contract hire brokers, fleets, internet forums and other sources confirming that some private and business drivers did indeed opt for a plug-in hybrid car such as a BMW 330e, Mercedes C350e or Mitsubishi Outlander PHEV for financial and taxation reasons but seldom plug them in, relying mainly on the vehicles’ petrol engines. Such practices could perhaps have been stopped from happening if the PiCG had rewarded drivers on a usage basis, proven plugging-in and recharging possibly linked to fuel or payment cards resulting in earnt financial reward as opposed to a lump sum at the outset.

Mitsubishi8 somewhat justifiably went to the press expressing ‘surprise and disappointment at the decision’, which the marque perceives as ‘completely at odds with the Government’s stated objective of making the UK a world leader in green mobility in the future’. However, although the latest Outlander PHEV had been revised to emit less than 50g/km CO2, which is remarkable, it’s commonly accepted that only the most diligent drivers under optimum conditions would achieve anywhere near the WLTP claim of 139mpg.

Viewing the future positively

Although industry figures such as the RAC’s Nicholas Lyes9 are correct to assert that ‘up-front costs [are] still a huge barrier for those hoping to switch to an electric vehicle’, it’s fair to say that OEMs are focussing a large percentage of their endeavours on developing electric vehicles, with mainstream manufacturer Ford set to release no fewer than fifteen electric models by 2022, so EV prices will certainly become increasingly affordable for fleets and private motorists alike.

While some drivers’ requirements admittedly can’t be met by full EVs, such as those covering long distances and needing fast refuelling times, electric cars’ battery ranges are improving all the time – so although the PiCG decision won’t be reversed, the outlook for prospective green vehicle adopters certainly isn’t bleak.

 

Sources:
1. https://www.buyacar.co.uk/cars/economical-cars/low-emission-cars/536/government-electric-car-grant-the-complete-guide
2. https://www.carbuyer.co.uk/tips-and-advice/147937/plug-in-car-grant-a-complete-guide
3. https://www.racfoundation.org/data/plug-in-car-grant-claims-data-page
4. https://www.motoringresearch.com/car-news/government-pulls-plug-in-hybrid-car-grants/
5. https://www.airqualitynews.com/2018/10/12/plugin-zero-emissions-cars/
6. https://www.bbc.co.uk/news/business-45831150
7. https://www.fleetnews.co.uk/blog/phevs-exclusion-from-the-plug-in-car-grant-was-inevitable
8. https://insideevs.com/mitsubishi-shocked-end-grant-uk-phev/
9. https://www.independent.co.uk/news/uk/home-news/electric-cars-hybrid-plug-in-grants-motoring-department-for-transport-a8596166.html