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Budget 2020 safeguards plug-in car grant and increases spending on infrastructure

Recently-appointed Chancellor of the Exchequer, Rishi Sunak, has delivered his first budget, and for the most part, it's pretty good news for EVs. Benefit-in-kind rates have been confirmed and VED won't be charged on EVs, but the biggest news is related to money destined for infrastructure.

We've been waiting with interest to see what the budget 2020 would bring for would-be and existing EV drivers. Much hinges on the decisions the government makes to support the zero-emissions segment of the market and expedite its growth – something that is imperative if the country is to get near its environmental aspirations.

By and large it is good news with steps having been taken to ensure EVs are as affordable as possible, and the infrastructure is there to support them.

Plug-in car grant safeguarded

Grant Shapps' comments around ending the plug-in car grant sparked much debate within the industry and in the wider media. Thankfully (and rightly) that time isn't now, and it has been extended to 2022-23 thanks to a further £403 million for the scheme. The grant for vans, taxis and motorcycles has also been extended for the same period of time.

Where changes have been made is in the amount of money available to EV buyers, which has been cut from £3500 to £3000. What's more, EVs costing more than £50,000 will be excluded – and that does exclude a lot of very good family cars. The Office for Low Emissions Vehicles (OLEV) said that the changes will come into force, but the rationale behind them was to “allow more drivers to benefit from making the switch for longer”. 

This is the second time the plug-in car grant has been cut, having been dropped from £4500 to £3500 in October 2018, at which point PHEVs were removed altogether from eligibility which has had a significant knock-on effect on their sales. Caveating its continuation of the PiCG, Sunak said the government was “considering the long-term future of consumer incentives to support the transition to zero emissions vehicles”.

Commenting on this news, Mike Hawes, SMMT Chief Executive, said: “We are pleased to see the Chancellor find room in his Budget to help make zero emission motoring a more viable option for more drivers – essential if we are to begin to meet extremely challenging environmental ambitions. The continuation of a plug-in car grant is an essential step in the right direction.”

Benefit-in-kind and VED

For company car drivers, EVs will be a compelling option as the proposed benefit-in-kind rates for 2020-21 and 2021-22 that we have known about for some time have been confirmed in the budget. What has changed is that they will then be frozen until 2025. This means that EVs and PHEVs will get zero or very low rates of BIK for the next few years which should see more fleets moving over to them.

There's a lot to digest with regards BIK and company cars, so keep your eyes peeled as we will be running a guide to EV company cars very soon.

Vehicle Excise Duty (VED) rates on zero-emissions cars will remain at zero and as an additional sweetener which somewhat softens the blow of the removal of the PiCG from £50k-plus cars, all zero-emissions vehicles will be exempt from the VED 'expensive car supplement' until 2025. This currently applies to all cars over £40,000 and comes in at £320, so that's a chunk of money EV buyers will no longer have to worry about.

Alongside these changes, the government is calling for evidence on VED which seeks advice on how it can use the duty to increase the number of people buying low- and zero-emissions vehicles as the ban on new petrol and diesel sales draws nearer.

Charging infrastructure gets half-a-billion

Over the next five years some £500 million will be made available to support the roll-out of a more robust fast-charging network. The goal is to ensure that no EV driver will be further than 30 miles from a rapid charging station – a fantastic move in our view. Part of this money will be made available to businesses to help reduce the cost of installing fast charge points on their premises.

In order that the money gets spent in the most effective way, the OLEV will complete a review of the current EV infrastructure and use that to plan for the fast-charging network.

Discover EV's take

The SMMT's Mike Hawes pretty much echoes our own sentiments in his comments: “Of course, much more needs to be done to maximise the opportunities as we transition the UK market and industry to new technologies, and the promised spending review will be a crucial moment for government to set out a long term vision for transport decarbonisation and industry investment in the UK.”

On the negative side, we're a little miffed that the PiCG has been reduced; £500 is a lot of money for people already stretching themselves to buy their first EV, and whilst the removal of the VED surcharge is a nice touch, it doesn't help people at the cheaper end of the spectrum. We shouldn't moan too much, though; the very fact that the grant is remaining combined with the pledge to drastically improve fast-charging infrastructure is pleasing to hear. Added into this the support for EVs in the business sector, and it seems like a well-rounded budget from a purely EV point of view.

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