Chinese EVs set to be excluded from UK's Electric Car Grant

EVs manufactured in Asia, including in China, are expected to be excluded from new UK electric car purchase incentives once strict new criteria is applied, including penalising battery manufacturing in countries with carbon-intensive grids. The Electric Car Grant is backed by £650 million of government funding and will knock up to £3750 off the price of a new EV. The offer of funding is a win for the UK automotive industry following months of fierce lobbying to help ease some of the burden of having to hit the strict EV sales target imposed by the ZEV mandate. However, the money will be hard to access. “The criteria for qualification looks quite tough,” former Nissan executive Andy Palmer told Autocar. “I’m in contact with several OEMs and they still don’t know which models will qualify”. The basic criteria is easy to understand, such as the requirement that qualifying cars must be zero-emission and cost under £37,000 (although higher trim levels can exceed that figure and still qualify, providing that an entry model with the same battery starts below it). Cars must also be offered with a battery warranty lasting for 100,000 miles or eight years, with an agreement to replace the pack if it falls below 70% capacity during that period. However, the deciding factor that determines whether a car falls into the highest band-one category for the full £3750 grant or band two for £1500, or is excluded altogether, is based on its environmental score – and that’s where qualification process becomes opaque. The score is based on the manufacturing location of not just the car but more importantly the battery cells. If the country of manufacture in question generates much of the power for its national grid from fossil fuels, then the car is denied a grant. The cell source accounts for 70% of the environmental score, while vehicle assembly contributes just 30%. The government has said that all cars are assessed equally and the environmental score element is to “incentivise more sustainable manufacturing practices”, but the underlying purpose is pretty clear. “Let’s call a spade a spade, this is probably looking to penalise cars that are produced in China,” Tim Dexter, UK vehicles policy manager for green pressure group Transport & Environment, told Autocar. At this stage car makers are gathering evidence to prove they qualify, so we don’t have a list of eligible cars yet. But the scheme is very similar to the one operated in France, and it can already be seen which cars there make the minimum environmental score and which don’t. In France, no Chinese brands qualify for the government EV incentive, and neither do any electric cars built in China by western brands, such as the Mini Cooper E or Cupra Tavascan. Mini might be rueing the decision to postpone production of the electric version at Oxford. It's not just China. No EV imported from Korea or Japan qualifies either. The French scheme takes into account distance travelled when totting up the environment score, which hurts the Asian manufacturers. The UK didn’t copy that element, but the promised hard look at the grid cleanliness will penalise China, Korea and Japan, all of which are more reliant on fossil fuels than Europe. European Union manufacturing locations will be assessed based on grid carbon intensity per country, rather than as a whole. This means that Polish-built EVs, such as the Jeep Avenger, or anyone using batteries from LG Chem’s vast plant there (the biggest battery factory in Europe) could be downgraded due to Poland’s coal-fired grid, which is rated the worst in Europe for emissions at 594g CO₂/kWh, according to the European Environmental Agency (EEA). Other high-emitting countries in Europe include the Czech Republic, home to Skoda, at 361g CO₂/kWh, and Germany, at 320g CO₂/kWh. French-built cars should be fine given the country's low-CO2 energy generation – the Renault 5 and 4 are built at Douai using batteries sourced nearby from Envision AESC. Outside Europe, EVs from Turkey, including the forthcoming Hyundai Ioniq 2, could be on shaky ground due to the country's high grid emissions. The forthcoming Nissan Leaf should also score well. The government has distanced itself from reports that the scheme was established to give Nissan a leg-up as it finally starts production of its new electric crossover in northern England, but it’s hard to see how the car won’t be an automatic band-one recipient of the full £3750. The UK is better than the European average on grid intensity, with a rating in 2023 of 162g CO₂/kWh, and Nissan has the added advantage of sourcing batteries in Sunderland from Envision AESC. Reinforcing the idea that banding will be more generous to UK-embedded companies is a section on the car makers’ application form that asks for 'UK presence – facilities and support' and 'UK opportunities'. A further qualification hurdle is that car companies must be signed up to the Science Based Targets Initiative that monitors and approves CO2 reduction goals within that company. That immediately takes Tesla out of the running after the US company backed out of its commitments. Hyundai and Kia aren’t signed up either, according to the SBTi dashboard that lists all participating companies. Stellantis also isn’t listed, although its former iteration PSA Peugeot-Citroën is. In short, the scheme will take a while to get going while car makers get their ducks lined up. Many won’t qualify at all, but if it persuades someone – for example, Mini – to shift electric car manufacturing to the UK, it could prove to be worth the money spent.

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Chinese EVs set to be excluded from UK's Electric Car Grant

Other EVs manufactured in Asian countries, such as in Korea or Japan, are also expected not to qualify

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Chinese EVs set to be excluded from UK's Electric Car Grant

Other EVs manufactured in Asian countries, such as in Korea or Japan, are also expected not to qualify

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