Electric Car Plug-In Car Grants (PiCG) UK: Budget 2020

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The Update On The Plug-In Car Grant (PiCG) Could Have Delivered More Good News For Buyers Of Electric Cars!

We have all been waiting eagerly for the update on the UK plug-in car grant (PiCG).  The 2020 budget (11th March 2020), delivered both, good and bad news, in regards to the electric vehicle incentive framework in the UK, for the purchase of electric cars, electric vans, electric taxis and electric motorcycles.  

The Good News

  • The UK government continues to provide an incentive framework for the purchase of electric vehicles via the Department for Transport (DfT) and Office for Low Emission Vehicles (OLEV).   The PiCG grant was due to expire at the end of March 2020. So far, the PiCG scheme has supported the purchase of up to 200,000 ULEVs.
  • The government has extended the plug-in car grant (PiCG) to 2022-23 and will provide a further £403 million for the grant. In addition, the government will provide £129 million for the plug-in grants for zero-emission vans, electric taxis and electric motorcycles. This will also be extended to 2022-23.  Plug-in grants for electric vans (up to £8,00), electric taxis (up to £7,500) and electric motorcycles (up to £1,500) remain at the same level. 

The Bad News

  • The amount available for the PiCG grant to buyers has been reduced by £500, from £3,500 to £3,000. 
  • All-electric cars costing £50,000 and more will not be eligible for the PiCG. 

The above changes have come into effect immediately.  

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  • Overall, the Budget 2020 announcement in relation to ultra-low emission vehicles is positive and welcome news for the nascent electric vehicle sector in the UK.  The government has committed to an incentive framework for another three years, and this clarity will certainly assist buyers to migrate to emission-free electric cars.  
  • However, the government should have avoided decreasing the grant available i.e. £500 lower. This is the third reduction in the PiCG grant since 2011. The grant was initially set at £5,000, then reduced to £4,500 and further revised down to £3,500. Battery-electric vehicles (BEVs) prices will not drop substantially in the immediate term.  It will take time for economies of scale to translate to lower prices for buyers.  In our view, the government should have retained the grant level up to £3,500 for at least, another 24 months.  
The All-Electric Audi e-Tron SUV
The All-Electric Audi e-Tron SUV
  • We also believe that the government should have continued to support pure electric cars priced at £50,000 and above.  The growth of the higher priced EV segment, to include BEVs like, the Tesla Model S, the all-electric Jaguar I-PACE and the all-electric Audi e-tron, is also imperative in the broader migration to zero-emission electric driving. 
  • However, we remain cautious, as the government may further revise downwards the available grants between now and 2023.  We certainly urge the Chancellor, Rishi Sunak, to keep the grants at the same level till 2023, to encourage the rapid adoption of zero-emission electric vehicles. 

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Ashvin Suri

Ashvin has been involved with the renewables, energy efficiency and infrastructure sectors since 2006. He is passionate about the transition to a low-carbon economy and electric transportation. Ashvin commenced his career in 1994, working with US investment banks in New York. Post his MBA from the London Business School (1996-1998), he continued to work in investment banking at Flemings (London) and JPMorgan (London). His roles included corporate finance advisory, M&A and capital raising. He has been involved across diverse industry sectors, to include engineering, aerospace, oil & gas, airports and automotive across Asia and Europe. In 2010, he co-founded a solar development platform, for large scale ground and roof solar projects to include, the UK, Italy, Germany and France. He has also advised on various renewable energy (wind and solar) utility scale projects working with global institutional investors and independent power producers (IPP’s) in the renewable energy sector. He has also advised in key international markets like India, to include advising large-scale industrial and automotive group in India. Ashvin has also advised Indian Energy, an IPP backed by Guggenheim (a US$ 165 billion fund). He has also advised a US$ 2 billion, Singapore based group. Ashvin has also worked in the real estate and infrastructure sector, to including working with the Matrix Group (a US$ 4 billion property group in the UK) to launch one of the first few institutional real estate funds for the Indian real estate market. The fund was successfully launched with significant institutional support from the UK/ European markets. He has also advised on water infrastructure, to include advising a Swedish clean technology company in the water sector. He has also been involved with a number of early stage ventures.

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