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EV grant cuts could derail car retail’s decarbonisation efforts, says NFDA

NFDA chief executive, Sue Robinson

Government’s latest cuts to the plug-in car grant could derail car retail’s decarbonisation efforts and will impact less affluent electric vehicle (EV) buyers most, the National Franchised dealers Association (NFDA) has said.

Commenting on the reduction of the PiCG in an unexpected change announced and implemented with immediate effect from this morning (December 15), NFDA chief executive said that the move “strongly disincentivises EV adoption across the UK”.

“It is extremely disappointing that the Government has chosen to reduce the availability of the plug-in grant as this move can derail the progress our sector has made in decarbonising transport, sends the wrong message to the consumers and will adversely impact less affluent motorists that are seeking a transition to a greener method of transport”, said Robinson.

AM reported earlier this morning on the latest government cuts to the PiCG, which follow reductions made back in March this year.

The grant has now been reduced from £2,500 to £1,500 and the value of vehicles eligible for the funding assistance reduced from £35,000 to £32,000 in a move described as a “double whammy” for car retailers and potential EV buyers.

Government also announced reductions to the Plug-in Van Grant (PIVG) and the Plug in Motorcycle Grant (PIMG) rates and eligibility criteria.

The Office for Zero Emission Vehicles (OZEV) said: “Government has a responsibility to manage the grant budget and to deliver value for money for taxpayers and as signalled to industry following the March 2021 grant changes, has therefore been unable to provide notice ahead of the grant changes.”

It added: “Once the webpage has been revised to reflect the grant changes, it is the responsibility of manufacturers or their representatives to notify OZEV if listed vehicles should not be eligible.

“Orders placed following the update of the webpage for vehicles later found to be priced above the cap will be cancelled. Vehicles eligible for the grant are also being amended on the grant portal”.

The NFDA today urged the Government to consider a number of issues that will be affecting dealers and customers at an operational level:

  • Price transparency: The sudden cut to the grant penalises those customers who were in the midst of choosing an EV but have not yet ordered one and will now see a price change overnight.
  • Consumer communications: Without prior notice, dealers now need to go quickly through all of their dealer systems and advertised prices/marketing materials to change prices to ensure they keep customers satisfied.
  • Stock: Dealers will be left holding stock that overnight has become more expensive for the consumer.
  • Margins: In some instances, dealers have had margins reduced on various models to ensure they fit within the previous £35,000 RRP Cap. With already small margins, they will now have vehicles in stock that are significantly more expensive on both outright purchase and monthly payments.

Robinson, the subject of a '5 minutes with...' interview in the latest editon of AM magazine, said: “Cutting the grant strongly disincentivises EV adoption across the UK. This, in turn, will exacerbate the unequal, regional EV uptake gap.

“While the market share of EVs is growing at an impressive rate, it is premature to reduce the levels of this support to the consumer and send the wrong message to the public, especially as other G7 nations continue to ramp up consumer support.

“We have already spoken with the Department for Transport to outline our concerns and we will continue to liaise with the Government. We encourage our members to contact us if they require any assistance or clarification.”

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