Government Grants for Plug-in Electric Vans

  • Plug-in Van Grant split into categories as maximum discount for vans up to 3.5 tonnes is reduced
  • Savings now as little as £3,000 for small vans, though heavier 3.5-4.25-tonne vans could be subsidised up to £16,000
  • Change to grant eligibility criteria means Transit Custom PHEV no longer qualifies

Effective immediately from 18 March 2021, the UK government has slashed the total amount of money available on most electric vans through the Plug-in Van Grant (PIVG) incentive scheme.

The maximum discount for 3.5-tonne vans is now £6,000 rather than £8,000, while the maximum saving on smaller vans is now £3,000 rather than £8,000. However, heavier electric vans such as those with 4.25-tonne ratings qualify for the 'small truck' grant, which offers an incentive of up to £16,000 (capped at 20% of the purchase price).

At the same time, the government has made the eligibility criteria tougher – which in the process rules out the electric van subsidy for the Ford Transit Custom Plug-In Hybrid.

Electric Plug-in Van Grant 2021 - Ford Transit Custom PHEV no longer qualifies

According to the Department for Transport (DfT), the government’s reasoning for changing the Plug-in Van Grant is to make the funding for it stretch further – reducing the individual payments means that more payments can be made to more people.

But inevitably industry bodies, including the Society of Motor Manufacturers and Traders (SMMT) are criticising the move, as it will also make each individual electric van purchase more expensive.

The Plug-in Car Grant (PICG) has also been reduced in the same decision.

What is the electric Plug-in Van Grant?

The PIVG is a government-funded discount for vans that can drive with zero emissions – which is to say using an electric motor instead of a conventional diesel or petrol engine. To qualify for the plug-in grant the electrified van must now meet the following standards:

  • > 60 miles or more of zero emissions driving range
  • > Less than 50g/km CO2 emissions (50gCO/km, as the DfT has it)

This is a change from the previous requirements, which were set at 75g/km CO2 and allowed hybrid vans to have a 10-mile zero-emissions range; pure electric vans were already required to have a 60-mile range to qualify for the subsidy.

How much is the Plug-in Van Grant incentive worth?

As of 18 March 2021, the PIVG has been split into two main grant rates for vans, divided by weight category:

  • > Vans less than 2.5 tonnes: 35% of purchase price up to £3,000
  • > Vans 2.5-3.5 tonnes: 35% of the purchase price up to £6,000

Previously, the PIVG was applied at a blanket rate of 20% of the purchase price up to £8,000 maximum discount, for all eligible electric vans up to 3.5 tonnes.

The DfT says the average Plug-in Van Grant pay-out in 2020 was ‘just under £7,000’, so the changes are going to have a real impact for many buyers, especially buyers of smaller vans.

What about electric vans at 3.5-4.25 tonnes?

Initially, there was no clarity on the status of heavier electric vans, a growing and potentially important part of the large electric van market as a special derogation for alternative fuels means any electric van up to 4.25t can be driven on a regular UK car licence (the limit is 3.5t for diesel vans).

However, the Department for Transport has now confirmed to us that these heavyweight electric vans qualify for the 'small truck' grant. This plug-in incentive applies to all commercial vehicles 3.5-12.0 tonnes, and is worth up to £16,000 (previously £20,000), capped at 20% of the purchase price.

So buyers of these bigger vans could still be quids in, though the subsidy for this category is limited to 250 grants per financial year, with only 10 available per customer.

What vans are eligible for the Plug-in Van Grant?

Every single 100% electric van sold in the UK meets the latest criteria for the PiVG, so if you were about to buy any of the following you are still eligible for a grant, albeit it at the reduced rates outlined above:

> Renault Zoe Van

> Maxus e Deliver 3

> Nissan e-NV200

> Renault Kangoo ZE

> Citroen e-Dispatch

> Mercedes-Benz eVito

> Peugeot e-Expert

> Vauxhall Vivaro-e

> Volkswagen ABT e-Transporter

> Fiat E-Ducato

> Maxus eDeliver 9

> Mercedes-Benz eSprinter

> Renault Master ZE

The full list of grant-eligible electric vans can be found on the government electric plug-in van grant webpage.

It’s a different story for hybrid vans. There are only three proper hybrid commercial vehicles on sale in the UK: the Ford Transit Custom Plug-in Hybrid and LEVC VN5 panel vans, and the Mitsubishi Outlander Commercial, which is a commercial 4x4.

Electric Plug-in Van Grant 2021 - LEVC VN5 is the only hybrid van that now qualifies for the PIVG

All three are plug-in hybrid electric vehicles (PHEVs), combining an electric motor with a petrol engine.

However only the LEVC VN5 (pictured above) has enough electric-only zero emissions capability (61 miles) to meet the new PIVG requirements. The Transit Custom PHEV and the Outlander Commercial PHEV can only manage 30.5 miles and 28 miles of zero emissions, respectively.

>> Best hybrid vans

Why has the government made the change?

Simply put: it wants the available funding to go further. By end of September 2020, the number of new ultra-low emissions vans registering using the incentive was up 50% versus the same period in 2019, with 3,320 hitting the road last year compared with 2,155 the year before.

In total, some 15,000 new vans have been funded since the plug-in grant was introduced in 2012, with over £100million in funding supplied so far. With 11 new eligible van models being launched in 2020 and more on the way, the idea of reducing each individual pay-out is to allow more people to get one before the grant fund is exhausted.

Electric Plug-in Van Grant 2021 - zero emissions driving of 60 miles required, Nissan e-NV200

You can’t please everyone, of course, with the SMMT, Ford and the British Vehicle Rental & Leasing Association (BVRLA) all voicing concerns.

Industry reaction to the changes to the electric van grant

SMMT chief executive Mike Hawes said: ‘The decision to slash the Plug-in Car Grant and Van and 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.’

BVRLA chief executive Gerry Keaney made similar remarks: 'Given the surge in battery electric vehicle adoption, it makes sense for the government to reconsider where and how it uses grants and incentives, but today’s move is poorly timed and will slow down the transition to zero emission motoring.

'Confidence in electric vehicles and their running costs is fragile, so slashing the grants and eligibility criteria will put a brake on the fantastic market momentum we have seen in recent months. This will come as a particular blow for the commercial vehicle sector, where BVRLA members have been working so hard to drive uptake of electric vans and trucks. Coming just months before the COP 26 summit and as other countries are increasing their zero emission subsidies, this move could also have a big impact on the supply of electric vehicles coming into the UK.”

Ford of Britain chairman, Graham Hoare had this response, following the Transit Custom removable from the grant-eligible van list: 'Today’s news from the UK Government that plug-in grants for passenger and commercial vehicle customers are being reduced is disappointing and is not conducive to supporting the zero emissions future we all desire.

'Robust incentives - both purchase and usage incentives - that are consistent over time are essential if we are to encourage consumers to adopt new technologies, not just for all-electrics but other technologies too like PHEVs that pave the way to a zero emissions future.'

Will the reduced electric van grant change your mind about getting an electric van? Let us know via the Parkers feedback email address.

Also read:

>> Best electric vans

>> Future electric vans

>> The Parkers guide to electric vans