Plug-in grant review on cards as claims shoot up

A review of the plug-in car grant could be  triggered in a matter of months, after more than 11,000 applications were submitted in February.

Customers took the opportunity to order an ultra-low emission vehicle (ULEV) with the full £5,000 grant, before the structure of the scheme changed to a three-tier system and its lower level of funding from March 1.

The new grant structure now in operation means veh- icles with a zero emission range of more than 70 miles (category 1) will receive a grant of £4,500, while vehicles with a shorter zero emission range (categories 2 and 3), such as plug-in hybrid vehicles with a petrol or diesel engine, will receive £2,500.

A price cap has also been introduced. Category 2 and 3 models with a list price of more than £60,000 will not be eligible for the grant, but all category one vehicles with a zero emission range of more than 70 miles will be entitled to the full £4,500 grant.

Figures from the Office of Low Emission Vehicles (OLEV) show that 16,000 fleet and retail plug-in vehicles were ordered in January and February – more than the 14,500 vehicles ordered in the whole of 2014.

However, these latest sales, which have been added to the claims already submitted, have taken numbers close to triggering another review of the plug-in grant.

As of the end of last year, 23,000 claims had been submitted for category 1 vehicles and 28,000 for categories 2 and 3 – 51,000 in total, of which half were made in 2015.

OLEV has said that the grant will be maintained under  the new regime until March 2017, or until 40,000 sales of category 1 vehicles, and 45,000 combined sales of categories 2 and 3.

The latest figures suggest that grants have now been provided for 67,000 vehicles.

OLEV declined to provide a breakdown on how applications received so far this year had affected the running totals for categories 1, 2 and 3 vehicles, when contacted by Fleet News.

A spokesman for the Department for Transport (DfT) refused to comment on whether plans were already under way for a review, due to the pace of registrations, or whether the structure would change before the end of the year.

The DfT spokesman said: “There is £400 million in the fund and I think that will keep it running in some form until at least 2020, adding 100,000 plug-in vehicles to UK roads.”

The Government is pushing towards every vehicle having zero tailpipe emissions by 2050.

Mitsubishi told Fleet News that sales of its Outlander plug-in hybrid increased by 41% in February, compared to the same month last year, due to the grant change deadline.

A Mitsubishi spokesman said OLEV needed to be given credit for encouraging plug-in vehicle adoption to the level it is currently.

He added: “We know the grant can’t go on forever.

“OLEV is having to judge a rapidly changing situation, and there’s no precedent for what has been a hockey stick spike in the market.”

However, the manufacturer said there has been no signal from the Government of further changes to the grant before the end of the year.

“We have a good relationship with OLEV and any changes have always been communicated in good time,” the spokesman said. “We are, however, expecting the grant to diminish over time and we are planning for that to happen.”

However, he added: “We don’t expect the reduction in the grant to have an adverse effect on demand for the Outlander PHEV – it will remain a strong seller for us.”

Mitsubishi’s confidence appears to be well-placed. A recent Fleet News poll suggested plug-in vehicles will be the company car of choice for almost one-in-three employees.

ULEVs were the most popular choice, after diesel, with 31% saying they would be choosing either a plug-in hybrid (23%) or an electric vehicle (8.2%). A further 7.1% said they would opt for a conventional hybrid.