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Plug pulled on plug-in grants

The electric bike trade has been left reeling after pre-Christmas slashing of government grants.

The week before Christmas is, of course, a good time to hide bad news. And the UK government grabbed its chance, announcing on December 15 that it was slashing the purchase grants to consumers for electric bikes and cars. It was presented as a move to focus help on the most affordable vehicles and spread the cash more widely amongst those who need it most. But the move saw the grants available for electric bikes cut by two-thirds, to a maximum of £500 from £1500, on bikes under £10,000. The cut was even harsher for mopeds – the cheapest possible electric vehicles – which saw the grant drop by 90%, from £1500 to £150. “These changes will allow the scheme’s funding to go further, helping more people and businesses to switch to an electric vehicle,” said Parliamentary Under Secretary of State Trudy Harrison MP, as she announced the changes in Parliament.

Heavy impact
The impact has been savage and immediate, and dealers and manufacturers alike have told BDN of their anger and dismay at the changes.

Their first complaint is that there was no notice given of the changes coming to the grant scheme. “We received the same notice that everyone else received, which was none,” said Dan Frost, senior operations manager at Super Soco. “This was very frustrating as we had spent nine days promoting the products at Motorcycle Live the previous week, at different prices.”

Jamie Masterman, from Sur-Ron distributor Urban Moto told the same story. “They called me at 7:15am on the day of the change and the online portal was frozen immediately. The lack of notice and consultation have caused significant annoyance to customers and dealers.”

Alec Sharp of specialist electric bike dealers English Electric Motorcycle Company had a little more notice – 15 minutes. “We were told by email that as of 7.00am that same morning no more PIVG was to be offered.”

And Jeremy Boorer at London dealership green-mopeds.com also reckons the changes should have had more warning. “We had absolutely no warning and I don’t think the MCIA did either. It’s been badly handled by OZEV [the Office for Zero Emissions Vehicles] and at the very least they should have given it as a warning to, for example, the new registration year.”

“We have a dealers’ Whatsapp group,” said Jason Brunt of Birmingham-based Zero Motorcycles dealership Streetbike. “I saw all the texts coming through that morning and then we got to work and checked the government site. It was pretty obvious that someone made the decision and it just got pushed through really quickly without any discussion with the industry. It feels that way anyway.”

Dealers were left high and dry, unsure if pending bike sales were affected. Jason Brunt again: “It meant that deals we’d done previously, on that day we didn’t know if they were going to be good deals or not. Zero themselves, they’re trying to help our customers, which shows a lot of commitment.”

Brunt thinks the effect is less pronounced at the top of the market though. “Some of our customers, they’re buying with cash, and the extra £1500 isn’t going to be a killer. I don’t think it will hit the Zero SR/F and SR/S models so much, because price-wise they’re at the top end of the scale – the rider who buys one of them probably has a Tesla on the driveway, too.”

Jeremy Boorer saw the effect straight away though. “It had an immediate impact, with lost sales that very week. If you suddenly uplift a price by at least £300, but in the worst case £1000, customers will buy a petrol  powered model instead.”

Robert Grace, director and founder of London-based electric bike firm Stirling Eco reckons the change means the grants are now almost not worth the time and effort to do the paperwork. “When we first started this, the grant was £1250, and now it’s almost not worth going after. We’re not relying on it as the time it takes to get the application in to get a £300 grant back is barely viable.”

And Grace is scathing about the government’s online grant processing portal. “The portal is a nightmare, it’s like writing an essay on nuclear physics. They just don’t want you to have it. And then they move the goalposts slightly and suddenly you’re non-compliant, and you have to re-apply. It takes three months to get any kind of response. We’ve had absolutely no help from the government whatsoever.”

Saving the pennies
Despite their anger, dealers do realise that government cost savings perhaps had to be made – and believe they are the main driver behind the decision. “Cost saving would be the obvious conclusion. We imagine the pandemic has been far more costly than anyone could have anticipated,” said Dan Frost.

“My speculation is that it’s a knee-jerk reaction to finding money lost because of Covid,” said Alec Sharp. “The people employed to look at the uptake of EVs in general will have seen it as an obvious opportunity to claw back some money in a market that, on paper, has seen significant increases in sales and, in their eyes, has been given all the incentives it needs for now.”

But the industry is critical of how the change has been managed. “We expected the grants to run for at least another two years,” said Jason Brunt. “I do get the fact that the government is spending on a lot of things, but they’re also making a lot of claims about trying to get pollution down and this seems a backwards step. They just walked out of the [COP26] Glasgow conference, they had a Zero police bike there, and then next thing they’re knocking the grants on the head. If they’d put it out there a month beforehand, anybody that was interested in a Zero would have had a month to get the deal sorted.”

“The government’s stance is to spread it around to more people,” said Jeremy Boorer. “But with electric sales more than doubling this past year, it had to end at some point. Other countries, such as Italy, are offering 30% off and then an extra 10% if trading in a petrol bike, and I envisaged a scrappage scheme would have come about as well as, or instead of, the grants.”

Meanwhile, the National Motorcycle Dealers Association also gave a comprehensive thumbs-down to the changes. Patrick O’Connell, head of the NMDA told BDN, “The government’s decision to reduce the availability of the Plug-in Motorcycle Grant was extremely disappointing as this move could derail the progress our sector has made in decarbonising transport, and it sends the wrong message to consumers and will adversely impact less-affluent riders who are seeking a transition to a greener method of transport.

“Cutting the grant strongly disincentivises new rider ePTW adoption across the UK as a ‘greener’ approach to mobility. This, in turn, will exacerbate the unequal regional EV uptake gap.”

And the NMDA pointed out a series of harsh practical impacts the changes will bring to the trade. “The sudden cut to the grant penalises those customers who were in the midst of choosing an electric bike but have not yet ordered and will now see a price rise overnight. Without prior notice, dealers now need to go quickly through all of their systems and advertised prices/marketing materials to change prices to ensure they keep customers satisfied. And dealers will be left holding stock that overnight has become more expensive for the consumer.

“The NMDA will maintain communications with the Department for Transport to outline our concerns and we will continue to liaise with the government on this issue. We encourage our members to contact us if they require any assistance or clarification.”

Commenting on the announcement, MCIA CEO, Tony Campbell, said: “It is with great disappointment we hear the government has today decided to drastically cut the level of support for mopeds and motorbikes typically emitting zero or low levels of emissions. The announcement comes as a hammer blow to consumers and businesses up and down the country which were, and are, fully behind the drive to zero-emission vehicles and a net-zero future. The MCIA will continue working on behalf of its members with government to ensure the right incentives are in place to ensure the full realisation of our sector’s many benefits”.

NMC anger
The National Motorcyclists Council’s Craig Carey-Clinch also hit out at the government over the change. “This reduction in the subsidy is hardly the actions of a government looking to support a shift towards zero emission motorcycles. There needs to be proportionate investment and subsidies for new technologies for motorcycling as has already been delivered to four wheeled vehicles. The plug-in grant for motorcycles was introduced six years later than the grant for cars and was proportionately lower than the grant for cars, meaning there has been a disproportionately lower investment in encouraging decarbonisation of the motorcycle sector.”

And Carey-Clinch suggested some more fundamental changes that need to be made to the grant scheme. “Longer term, the NMC would like to see the grants evolved to encompass a technology-neutral approach to decarbonisation. Manufacturers have made it clear that battery electric should be considered only a partial solution for motorcycles. It therefore makes sense to apply subsidies and incentives that allow all technological avenues to be promoted, including hydrogen and carbon-neutral liquid fuels. Subsidies should also encourage reduced full lifecycle carbon reductions across all transport segments, not simply tailpipe emissions. The recent ZEMO study shows that motorcycles outperform battery electric cars for lifecycle analysis in most scenarios. This should be recognised by policy makers and exploited.”

What the future holds
Like it or not though, the policy has been changed – and with the current state of flux at Westminster, it seems unlikely to be the focus of much government energy in the short or medium term. How does the trade see the impact of the grant cut?

“The new values for electric mopeds are less than 10% of the original grant,” said Jamie Masterman. “This will have an immediate negative affect on sales. With increasing distribution costs and the weakening pound against the US dollar, the loss can’t be covered by importers’ margins. The scale of the change is very difficult to understand, although electric mopeds were showing great progress year-on-year. This change will no doubt force many customers to reconsider the available options and cancel or delay plans.

“Our only saving grace is that demand for enduro mopeds in particular continues to be very strong and they still offer some unique advantages over ICE machines. Lightweight electric machines will continue to be in demand, especially for the recreational enduro and trail rider, but without the higher state subsidies the market’s expansion will now be considerably slower than we initially saw.”

“It’s too early to tell,” said Dan Frost. “With most prices fluctuating already for our competitors due to container price increases, it’s possible that consumers may be able to tolerate the slightly higher prices. However, the electric market overall will suffer as a result. We made the decision to sacrifice our margin to try and ensure that we remain competitive and achieving sales moving forward.”

Alec Sharp is sanguine though. “Will it affect sales? Short term, yes – long term, I believe no. It now makes it a level playing field with ICE bikes – plus the fact that people are looking to leasing schemes to ride electric means that £1500 over a sufficient term makes little difference to the monthly payments. Around a third of our sales are of used machines which have already had the grant taken off; another third is offroad, to which the grants are not applicable; and the final third is on-road and applicable for the grant.”

“Some importers had already increased their prices due to supply chain challenges,” said Jeremy Boorer. “And then they basically passed on the decrease of the grant as a corresponding increase in prices. A couple are holding their prices till February 2022, but margins don’t allow for this to be absorbed by us.”

“This was a setback,” said Jason Brunt. “We were looking at 2022 being our year to kick on with Zero, but there’s no fault from Zero. From the government side it happened very very quickly, without any notice. We won’t feel the full effects until the summer comes, as that’s when we sell the bigger bikes. The amount of people who finance the bikes has been pretty small but now Zero has 0% finance to try and encourage new bikers in. But if the price goes up £1500 then, even with the 0% finance, it sounds even more expensive now. I think it’s going to hit the commuter market.”

But Robert Grace is scathing about the entire approach of UK and local government to electric motorbikes. “We’ve had absolutely no help from government whatsoever. No one turned up to COP26, and no one seems to be leading or taking the bull by the horns. We’ve been in touch with the London Mayor’s office about the grant, but also about Low Traffic Neighbourhoods, asking why they’re allowing pedestrians and cycles through but not electric vehicles – which are actually more qualified because we have safety kit, insurance and registration plates, so it’s creating unfair competition. And they refer us to TFL and then they refer us to the mayor’s office, and then back again. It’s like the Wild West, no one knows what’s going on.

“They’re all into the idea of green technology, but no one does anything about it. And they’re missing a trick. Look at E-scooters, they’re absolutely illegal to ride yet they’re not policing it: there were 155 taken off the roads last year, but thousands have been sold. E-bikes sail past you here in London at 20mph-plus because they’ve been de-restricted. And they’re much more dangerous because they’re unpoliced.”

 

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