The Government has performed a U-turn over plans to freeze fleets out of a multi-million pound subsidy package for electric cars.

In April, when announcing the £230 million initiative, the Department for Transport told Fleet News that its handouts were for private motorists only (April 23, 2009).

However, it now says that two options are on the table.

The first involves leasing and rental companies bidding for a slice of the subsidy to reduce the cost of putting electric cars on their books.

The second will make a point-of-sale subsidy available to fleets and private motorists via dealerships.

The initiative means electric and plug-in hybrid cars will cost no more than an equivalent petrol or diesel model to lease, despite their higher initial cost.

It mimics the Powershift funding for alternative fuels which ran from 1999 to 2005.

The subsidies – up to £5,000 per car – will be available from 2011.

The BVRLA said the Department for Transport (DfT) had recognised fleets as the most effective route to get new technology into mainstream motoring.

John Lewis, BVRLA chief executive said: “The eligibility criteria will ensure that the vehicles being subsidised have the right mix of per-formance, warranty, safety, range and low or zero emissions – all of which are potential stumbling blocks.”

ACFO chairman Julie Jenner said that, while welcoming the proposal, she was concerned that the vehicle specification criteria (see below) failed to reflect fleet needs.

“A range of just 70 miles will not meet the requirements of most fleets,” she said.

Jenner also questioned whether the competitive bidding process would lead to keener leasing rates.

But Leasedrive Velo said fleets would benefit. “Any subsidy or grant that will reduce the capital cost will definitely reduce the lease cost of the vehicle,” said Roddy Graham, Leasedrive Velo commercial director.

Last week, Masterlease surveyed its fleet customers and found that 58% would use electric vehicles if the grants were made available.

The DfT appears to favour the lease option, although it does not rule out splitting the funds between the two.

“This option has a number of potential advantages over a conventional grant scheme,” said a DfT spokesman.

“By encouraging the vehicle leasing approach as part of a competitive process, we would be targeting a sector of the market that could be very important for the emergence of electric vehicles.”

The DfT is looking for fleet views by the end of September. Email yours to fleetnews@bauermedia.co.uk with EV in the subject box.

 

 

The vehicles that will be eligible must have:
 

  • European type approval for use as a car (M1).
  • Receive some or all of their power from an external electricity source.
  • Tailpipe emissions of 0g/km CO2 for an EV or 75g/km CO2 or less for a PHEV (range-extended electric vehicles which use petrol/diesel/ biofuel-powered generators will be counted as PHEV).
  • Electric drive range in excess of 70 miles for an EV, 10 miles for a PHEV.
  • Have a maximum speed in excess of 60mph.
  • Rated as at least four stars in EuroNCAP crash tests.
  • Warranty for electric powertrain (including the battery) of at least seven years or 100,000 miles.