The UK government has introduced new electric vehicle (EV) grants, offering buyers savings of up to £3,750 when they switch to or upgrade to an electric car.
Starting 16 July, car manufacturers can apply for the Electric Car Grant for new EVs priced at £37,000 or less. Part of the Government’s Plan for Change, the scheme is supported by £650 million in funding.
Eligibility will depend on sustainability criteria, which the Government has yet to reveal. Vehicles will be placed into two categories:
⚡Band One: Eligible for the full £3,750 discount
⚡Band Two: Eligible for up to £1,500
According to the Department for Transport, the grant bands—currently two, but potentially more in the future—will be based on the amount of CO₂ emitted during a vehicle’s production. However, exact thresholds have yet to be confirmed.
The scheme will be funded through to the 2028/29 financial year, with the goal of narrowing the upfront cost gap between petrol and electric vehicles.
This move follows growing concerns over lagging EV adoption. Despite government targets, fully electric cars currently make up just 21.6% of new car sales—well below the 28% target set by the ZEV Mandate for 2025, according to the Society of Motor Manufacturers and Traders (SMMT).
Until now, the electric car market has been largely driven by fleet and company car buyers, who benefit from generous benefit-in-kind tax incentives. The new Electric Car Grant, however, is designed to make EVs more accessible to private buyers and help address the shortfall in retail sales.
Mike Hawes, Chief Executive of the Society of Motor Manufacturers and Traders (SMMT), welcomed the move, saying:
“Today’s announcement of the return of government support for the purchase of electric vehicles is a clear signal to consumers that now is the time to switch.
Rapid deployment and availability of this grant over the next few years will help provide the momentum that is essential to take the EV market from just one in four today, to four in five by the end of the decade.
This announcement is a welcome response to consistent calls from the industry for more support, which will be in addition to the substantive subsidies already provided by manufacturers.”
This isn’t the first time the government has offered financial support for electric vehicle purchases. The Plug-in Car Grant (PiCG), introduced in 2016 by the Conservative government, offered £1,500 off EVs priced under £32,000, but it was discontinued in 2022. Unlike that scheme, the new grant requires manufacturers—not consumers—to apply for funding.
