Firms Cautious About 'Flash In The Pan' Electric Vehicle Subsidy

Feb 09, 2011, 07:59 ET from Lex Autolease

BIRMINGHAM, England, February 9, 2011 /PRNewswire/ -- A new survey together with an in-depth report on the hybrid and EV market has revealed that the GBP5,000 Plug In Car Grant is essential if businesses are to continue investing in low or zero emission vehicles.

As of last month (January), private and business buyers of EVs will be eligible for up to 25% off the cost of a plug-in car, limited to GBP5,000. However, the Government intends to review the GBP43m fund in 12 months time, spelling long-term uncertainty for firms looking to invest now.

A poll by Lex Autolease - the UK's largest provider of company vehicles - reveals that almost half of financial directors (47%) would not pursue their company's interest in electric vehicles, or plug-in hybrids, if the subsidy was removed.

Chris Chandler, principle consultant at Lex Autolease, says: "We've published the actual cost of ownership figures in a new guide, which clearly shows that the subsidy is vital to ensuring these vehicles are cost competitive. Without it, new EVs such as the Nissan Leaf can't compete with the likes of a diesel Golf or even the Toyota Prius on cost.

"Businesses are sending out a clear signal that their interest in electric vehicles could be seriously diminished without the subsidy. Particularly if future changes mean the numbers no longer stack up."

In contrast, business drivers say that one-off, up-front incentives are not a major turn on. Only 2% would be enticed by a discount or subsidy, whereas almost half (43%) said that low or zero company car tax would make them want to choose a plug-in hybrid or fully electric vehicle.

Chris Chandler adds: "This spells the way forward for the future of business car taxation, which is essentially more of the same. The current system rewards those who choose clean and frugal vehicles and it has been working well since 2002.

"However with long vehicle replacement cycles the industry needs plenty of advanced notice and a longer term commitment from Government to allow them to adopt these new technologies. Given the scale of the investment by manufacturers, the industry can't afford for this to be a flash in the pan like scrappage."

In response to the growing appetite for more information on EVs and plug-in hybrids, and the infrastructure required to support the technology, Lex Autolease has published a freely available in-depth guide.

Entitled - 'Electric vehicles - the way forward?' - the report is a culmination of a year-long, in-depth study by Lex Autolease's Consultancy team. The content details the pros and cons of EV ownership from a business and company car driver perspective. To receive a copy, please email:

About the Plug-In-Car Grant

The level of the Plug-In-Car Grant has been agreed until 31 March 2012. The level will be reviewed in January 2012. After taking into consideration a number of key factors such as the costs of vehicles and the development of the early market, the level will then be set for subsequent years. GBP43m has been made available up to the end of March 2012. The final budget beyond 2011/12 will be confirmed at the spending review.

    The Plug-In Car Grant will require compliance with 8 eligibility criteria:
    Vehicle Type: New cars only. Excludes motorcycles, quadricycles and vans.
    Carbon Dioxide tailpipe emissions: Less than 75g/km.
    Range: EVs minimum 70 miles, PHEVs minimum electric range 10 miles.
    Minimum top speed: 60mph.

Warranty: 3 year or 60,000 miles vehicle warranty, plus, a 3 year battery and electric drive train warranty with a consumer option for a 2 year battery warranty extension.

Battery performance: Either a minimum 5 year warranty on the battery and electric drive train as standard OR additional evidence of battery performance to illustrate reasonable performance after 3 years of use.

Electrical Safety: Vehicles must comply with UN- ECE Reg100.00 (PHEVs will be required to show they have met the technical requirements of 01 series amendments to UN- ECE Reg 100); vehicle manufacturers will be required to identify risks associated with vehicle use and state mitigating actions.

Vehicle crash safety: European Commission whole vehicle type approval (EC WVTA, not small series) OR evidence that the car demonstrates appropriate levels of safety as judged by international standards.

About Lex Autolease

With over 100 years' combined experience in the fleet industry, Lex Autolease is the UK's leading fleet management and funding specialist, and currently own and manage around 1 in every 100 vehicles on UK roads. It has a long track record of winning industry and customer awards for its proposition and service.

Lex Autolease shares joint ownership of Fleet Synergy International with Athlon Car Lease International, an international alliance providing access to fleet management experts in more than 30 countries.

SOURCE Lex Autolease