Government Revives EV Incentives: Up to £3,750 Off New Electric Cars

In a bold push to accelerate the UK’s shift to cleaner transport, the government has relaunched the Electric Car Grant (ECG). With a £650 million budget, this initiative offers up to £3,750 off new electric vehicles (EVs) priced at or below £37,000, aiming to make EV ownership more accessible to everyday motorists. The GuardianMoneyWeekThe Times

Two-Tier Grant Structure Reflects Sustainability

The grant operates on a two-tier system:

• Band One: Up to £3,750 for EVs manufactured to the highest environmental and carbon-footprint standards.
• Band Two: A £1,500 discount for models that still meet basic green criteria but fall short of the top tier.The GuardianMoneyWeek

Grant eligibility depends not only on the RRP cap of £37,000, but also manufacturer commitments—such as verified Science-Based Targets, location of production, battery lifecycle emissions, and overall sustainability.The GuardianThe Electric Car SchemeFinancial Times

Rollout to Date: Grants Applied Automatically

The ECG launched in July 2025, with the first eligible models unveiled in August:

• 5 August: Four Citroën models—ë-C3, ë-C4, ë-C5 Aircross, and ë-Berlingo—approved for the £1,500 discount.GOV.UK
• 9 August: A further 13 models from Nissan, Renault, and Vauxhall added, bringing the total eligible vehicles to 17.GOV.UKAutomotive Logistics
• Mid-August: Five more EVs—Cupra Born, Volkswagen ID.3, Peugeot e-208, e-2008, and e-Rifter—join the scheme, raising the tally to 24 eligible models.carwow.co.uk

Buyers don’t need to apply—instead, manufacturers list eligible models and apply for the grant, which is automatically deducted at point of sale.The GuardianMoneyWeekGOV.UK

Aiming at the Affordable EV Market

By capping eligibility at £37,000, the grant targets more affordable EV models—a category often overlooked in the premium-dominated UK market. Analysts hope it will shift demand toward mainstream buyers rather than corporate fleet clients.The GuardianThe TimesThe Electric Car Scheme

Yet, no vehicle has qualified for the top-tier £3,750 grant so far. All approved models are receiving the £1,500 Band Two discount only.The TimesThe Times

Market Response and Industry Concerns

Industry reaction has been mixed:

• Dealers and consumers have expressed confusion over complex eligibility rules and slow approval processes, dampening expected demand.The TimesFinancial Times
• Some automakers have responded proactively by cutting retail prices to fall below the £37,000 threshold: e.g., Leapmotor’s “leap-grant”, while others like Hyundai, Kia, and Volvo have launched promotional offers to stay competitive.The Guardiancarwow.co.ukGOV.UK

Infrastructure and Broader Support Measures

The ECG is part of a wider “Plan for Change”, aiming to support EV adoption through multiple channels:

• The UK has added over 17,300 public chargepoints since July 2024, a 27 % increase, with over 82,000 fast chargers now available nationwide.GOV.UKThe Times
• Additional infrastructure and subsidy programs include the EV Chargepoint Grant for renters and flat owners, and the Workplace Charging Scheme, helping to install chargers at homes and businesses.The Electric Car SchemeWikipedia

Grant Timeline and Future Outlook

The scheme runs through the 2028–2029 financial year, or until funds are exhausted—whichever comes first.The Electric Car SchemeMoneyWeek

Industry bodies like the SMMT warn that the grant’s focus on new EVs only may hurt the second-hand market, creating financing risks. Automakers are calling for clearer guidance and support for used EVs to ensure market stability.Financial Times

Conclusion: A Strategic but Complex Move

The new UK Electric Car Grant marks a critical step in driving EV affordability and adoption among private buyers. With significant funding and immediate discounts, it has the potential to reignite stalled consumer interest.

However, complex eligibility rules, selective model approvals, and administrative uncertainty have hindered its early impact. To truly boost EV sales across the UK, regulators must streamline processes, clarify criteria, and expand support to all segments of the EV market—both new and used.