What Is The Electric Car Grant?

There will be a £5000 grant available to purchase an electric car from January 2011, but what is it and how will you be eligible for it?

As part of the global drive to reduce carbon footprints, the government is offering a £5000 grant towards the purchase of an electric car from January 1st 2011.

£43 million has been pledged to fund the car purchases, which will help buy 8,000 electric cars under the scheme. There were fears that this scheme was to be axed entirely under the austerity measures announced in the emergency budget, however the total available was reduced from £230 million to the current level of £43 million.

This will still go a long way towards the purchase of thousands of electric cars, but how will you get this money if you want to convert to a plug in vehicle?

Percentage of retail price

The grant is actually for 25% of the retail price of the electric car, up to a maximum of £5000. So if the car costs £20,000 you will receive the full £5000. An electric car costing £15,000 will be eligible for a £3000 grant.

There are conditions about the car specifications that must be met also. For example, the car must have a range of at least 70 miles between charge ups and must be capable of travelling at least 60 miles an hour.

It must also meet European safety standards so you cannot create your own “vehicle” in your shed to qualify.

Some hybrid electric cars will also be eligible for the grant as long as they are capable of travelling 10 miles on battery power alone. The current Toyota Prius will not meet this requirement, for example.

The grant will not apply to the purchase of second hand electric cars as they must be new at first registration to comply with the eligibility criteria, presumably to encourage electric car manufacturers to enter the UK market and develop new vehicles.

Other Electric car cost savings

Receiving a grant to purchase an electric car will not preclude you from receiving other cost savings.

Electric cars do not pay road tax and business users only pay small amounts of company car tax.

With fewer moving parts, electric cars will be more reliable than conventional vehicles, and cheaper to maintain, however the costs of replacing the batteries is likely to offset these savings, at least in the early days when this technology is at its most expensive.

Applying for the grant

There will not be a lot of paperwork involved to receive a grant as the application is made at the point of purchase at the retailer.

There is no restriction on the number of cars that can be purchased under the scheme and businesses are eligible also.

Which electric cars are eligible for the grant

This is the problem. There are currently no electric cars that meet the specifications for the grant.

The G-Wiz and Mega City are not eligible because they are classified technically as quadricycles, not cars.

Manufacturers such as BMW with the Mini E and Vauxhall with the Astra based Ampera are moving towards market readiness for their electric car products, however the launch of these vehicles is still some way off.

The Vauxhall Ampera, for example is not due to be sold in the UK until 2012. Other manufacturers such as Nissan are also developing the Leaf, an electric car, however these will not be available until early 2013.

Will there be a premium to pay for an electric car?

Sadly, it does appear that electric cars will cost significantly more than their conventional counterparts.

Although the grant is likely to offset some, or most of this, the new owner of an electric car will certainly be paying a premium for being an early adopter of this technology.

The Vauxhall Ampera is likely to cost around £20,000 when it is finally launched. Even though a buyer will be able to claim £5000 under this scheme, this car will still cost the new owner £3000 more than the petrol version of the Astra, that it is based upon.

The additional costs of the new electric car, taking into account the grant, will soon be recovered from the reduced running costs during the ownership of the vehicle, however.