Fleet News

Analysis: Electric van grant likely to boost fleet purchases

Vehicle manufacturers that have invested billions of pounds in developing electric cars and vans have been given a lift after the UK Government extended the plug-in grant scheme.

Figures from the Society of Motor Manufacturers and Traders underline the need for the continued incentives: electric cars and plug-in hybrids accounted for just 0.054% of the market in 2011 – equivalent to one in every 1,845 cars sold.

Transport minister Norman Baker announced that the Plug-In Car Grant, which offers 25% – up to a maximum of £5,000 – off the price of an eligible car with CO2 emissions of 75g/km or less would continue.

And in a move intended to help boost sales of electric vans, the Government is launching a Plug-in Van Grant, reducing the price of eligible vans by 20% – up to a maximum of £8,000.

“This is great news for businesses given the lower running costs of these vehicles,” said Baker. “Fleet buyers tell us that this is one of the most important factors influencing their decision on what to buy.”

Nearly one-third of respondents (31.8%) to a fleetnews.co.uk poll said that a grant of up to £8,000 would make them more likely to buy an electric van.

The Department for Transport (DfT) is due to announce the first vans which will qualify for the grant “shortly” while there are currently 10 cars that qualify for the car grant.

Baker said: “Car buyers have had a year to take advantage of our grant and now it’s time for van buyers to get their chance to go electric.”

In 2011, 1,052 vehicles eligible for the Plug-In Car Grant were registered and 892 applications made. The lag between registrations and grant applications is down to manufacturers applying for grants following the purchase of the car.

However, the number of applications steadily fell during 2011 after an initial surge in the first few months. More applications were received in the first quarter than in the rest of the year combined.

The Government has paid out only £5.26 million from the £300m Plug-In Car Grant coffers. That helps to explain its commitment to 2015 and its ability to offer a new way of accessing the cash through the Plug-in Van Grant.

However, it also recognises the value of the motor manufacturing industry to the UK economy. As an example, Nissan has invested £420m in the Leaf and its battery development.

Its Sunderland plant is geared up to produce 50,000 units of the Leaf from 2013, while it will start battery production in the next few months.

Nissan sold 635 Leafs in the UK in 2011 – equating to a 60% share of the ultra-low emission car market – but it would not share its sales predictions for 2012 or 2013.

Instead, it told Fleet News it was planning for a “small increase” in 2012 and a “much larger increase” when Leaf production starts in the UK in 2013.

Critics suggest that one motive for some manufacturers investing in electric vehicles is to help them bring down average CO2 emissions and head off potentially massive seven-figure EU fines.

This year, 65% of a manufacturer’s newly-registered cars in the UK must meet a target of 130g/km. By 2015, all cars must hit this target.

According to motoring analyst Jay Nagley, a manufacturer selling more than 300,000 cars a year and missing CO2 targets by 20g/km could face a fine of more than £1,200 for every car sold.

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