EV grant loopholes 'to unfairly boost fleet sales'

The government has rejected suggestions its new Electric Car Grant (ECG) offers public money in subsidies to buyers who don’t need any extra encouragement to make the switch. Private sales have typically made up only around one in five EV sales, and repeated calls for subsidies from the automotive industry since the introduction of the ZEV mandate last year have focused on helping stimulate sales in the private market if car makers are to keep up with the growth in electric vehicle sales that the mandate requires. Meanwhile, fleet EV sales have long been incentivised through to favourable benefit-in-kind rates that make them a financial no-brainer for a majority of company car buyers. These incentives have driven the majority of growth in the EV market to date. However, the new ECG, which offers banded grants of up to £3750 off the price of a new EV is available to fleet buyers as well as private buyers, allowing public money to be used to help EV buyers effectively get extra financial relief from the government on a purchase they’d likely make anyway. “The government is committed to supporting all consumers who would like to purchase an electric vehicle, whether that’s privately or through financing arrangements such as leases,” said a spokesperson from the Department of Transport in response to Autocar’s highlighting of this point. It has emerged that the ECG has no minimum retention period after a customer has taken delivery of the car, potentially allowing them to flip the car for profit should a model be in demand and nearly new models selling close to or even above the cost of a new one. The government considers this scenario “unlikely” yet “should this kind of behaviour materialise, the government would act swiftly to prevent it”. The spokesperson also confirmed that dealers will not be able to pre-register vehicles and get the grant and all grants are “only paid at the point a vehicle is delivered to a named customer”. They also denied that requirements to access the ECG are discriminatory against car makers from certain countries, or that it was designed to encourage more local manufacture of EVs. Car makers would be able to request a review to allow them to access the grant if they are initially denied being able to offer it to buyers. The ECG’s qualification criteria is based on the emissions of a country rather than a car maker itself in its operations and manufacturing plant. This means that EVs and/or those with battery packs made in the likes of China, Korea and Japan will likely be excluded, as well as the likes of battery specialist Poland, due to these countries’ reliance on fossil fuels in their energy production. According to the Telegraph, China has already called out the ECG for being against World Trade Organisation (WTO) rules for creating a “non-discriminatory” trading environment. It is understood that governments for other affected countries with excluded EVs have also written to the government, or plan to. “All manufacturers are treated equally,” said the spokesperson in response to claims that the ECG’s qualification criteria is discriminatory. “If a manufacturer feels that their local electricity arrangements mean their manufacturing is greener than the baseline data, they can request a review to have their scoring altered. “The government is confident that the scheme is in keeping with its international obligations and we will continue to work with our partners internationally to support the zero emission vehicle transition.” The government has also rejected suggestions that the ECG will create a two tier market between car makers that can offer the grant on its models and those that can not, and in turn harming a car maker’s ability to hit the ZEV mandate target. Likely pre-empting its cars will be denied access to it and thus avoiding that scenario, the likes of GWM Ora and MG have already announced equivalent ECG discounts on its models. “The government is confident that all manufacturers have the tools they need to comply,” said the spokesperson in response to the potential harm the ECG could do to ZEV mandate compliance, although it didn’t address a related point that car makers denied the ECG would have to restrict sales to popular ICE-powered models in order to artificially inflate its proportion of EV sales. While no changes are expected in the short term to what was a surprise announcement for car makers last week, the ECG will be kept under review and “will evolve as the market does”, the spokesperson added, and said it welcomed feedback from car makers as part of this.