Plug-in car grant cut and capped

  • £3,000 discount slashed to £2,500
  • £50,000 cap cut to £35,000
  • Should mean the grant lasts longer

The government-backed Plug-in Car Grant for fully electric cars has been cut from £3,000 to £2,500. Cars eligible for the grant now need to be priced under £35,000 – previously it was £50,000.

These changes came into force on 18 March 2021. Reductions needed to be made in order for the funding to last longer, according to the government.

The government added that the new £35,000 price cap is in place because higher-priced vehicles are 'typically bought by drivers who can afford to switch without a subsidy from taxpayers.'

> Revealed: Best new cars to look forward to in 2021

Price cuts and adjustments

Car companies in the UK have already reacted to the change in the Plug-in Car Grant. Kia introduced a new trim level for the e-Niro. The '2' comes in at £34,945 and has a 282-mile official range.

Peugeot reduced all of its e-2008 range by £450, ensuring Active Premium, Allure, and Allure Premium models are still eligible for the grant. Citroen introduced a £550 price reduction in order to make its top-spec e-C4 Shine Plus cars still eligible.

MG will offer buyers the chance to redeem the full £3,000 rather than £2,500 by essentially offering a £500 discount.

>> The full list of applicable plug-in grant cars

Increase in choice

Why the drop? The number of sub-£35,000 electric vehicles has increased by nearly 50% since 2019. Government figures show more than half the models currently on sale will still be eligible for the grant.

Transport Minister Rachel Maclean said: 'The increasing choice of new vehicles, growing demand from customers and rapidly rising number of charge points mean that, while the level of funding remains as high as ever, given soaring demand, we are refocusing our vehicle grants on the more affordable zero emission vehicles – where most consumers will be looking and where taxpayers' money will make more of a difference.'

Not everyone thinks the cap is a good idea however.

plug-in car grant cut

The Society of Motor Manufacturers and Traders (SMMT) Chief Executive, Mike Hawes, said: 'The decision to slash the Plug-in Car Grant and Van & Truck Grant is the wrong move at the wrong time. New battery electric technology is more expensive than conventional engines and incentives are essential in making these vehicles affordable to the customer.

'Cutting the grant and eligibility moves the UK even further behind other markets, markets which are increasing their support, making it yet more difficult for the UK to get sufficient supply. This sends the wrong message to the consumer, especially private customers, and to an industry challenged to meet the Government's ambition to be a world leader in the transition to zero emission mobility.'

What this means for you

In the short-term it means higher-end electric cars will get more expensive. For instance, the Tesla Model 3 and Mustang Mach-e are now ineligible for the grant.

While cheaper models will be more expensive too as they will only receive a £2,500 discount rather than a £3,000 discount.

In the long-term, it looks like there may be future cuts. Transport Minister Rachel Maclean said 'We will continue to review the grant as the market grows.'

In the March 2020 Budget, chancellor Rishi Sunak cut the Plug-in Car Grant from £3,500 to £3,000.

Further reading

>> Cheapest electric cars in the UK
>> Best electric cars to buy in the UK
>> Plug-in Vant Grant cut

Plug-in car grant cut