The government’s new Electric Car Grant (ECG) will save motorists up to £3,750 off the price of a new EV – provided they are priced at or under £37,000.
The new ECG will also focus on sustainably-built electric cars. Only cars that meet the ‘highest manufacturing sustainability standards’ will be eligible for the full £3,750 grant.
This is expected to benefit vehicles such as the latest Nissan Leaf and the future British-built electric Mini Cooper.
Some other EVs, such as those built in China, may see a lesser ECG grant applied – or might not be eligible for the Electric Car Grant at all.
Car manufacturers will be able to apply for funding from today: 16 July 2025. To provide certainty to motorists, they government has confirmed the Electric Car Grant will be available until the 2028/29 financial year.
It will be car brands, rather than car buyers, who apply for the grant, meaning the savings will be applied automatically when buying a new electric car.
The £650 million incentive scheme aims to help cash-strapped retail buyers get into a new electric car. A common complaint is that EVs are too expensive.
Auto Trader figures show the average new petrol car costs £33,980 so far in 2025. However, the average electric car is £49,154.
That’s an electric car price premium of more than £15,000. The new ECG will go some way to narrowing this.
Cleverly, the ECG is pitched at or under £37,000 rather than, for example, the existing £40,000 Expensive Car Supplement.
As of this year, EVs became eligible for road tax. Buyers of electric cars costing more than £40,000 also have to pay the Expensive Car Supplement (ECS), which adds an additional £425 a year between years two and six.
Some brands, such as Vauxhall, cut prices of their EVs to dip below the £40,000 Expensive Car Supplement. There is a possibility that prices of some EVs may now be cut further to benefit from the Electric Car Grant.
Announcing the new Electric Car Grant, transport secretary Heidi Alexander said it will “not only allow people to keep more of their hard-earned money, it’ll help our automotive sector seize one of the biggest opportunities of the 21st century”.
Ian Plummer, commercial director at Autotrader, said that “affordability has consistently been the biggest barrier to electric adoption, and it’ll be great to see these grants make it easier for more people to make the switch.”
Mike Hawes, SMMT chief executive, added: “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.
“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.
“Today’s confirmation of consumer grants,” said Ford UK chair and MD Lisa Brankin, “is great news for UK consumers and will make purchasing an electric vehicle much more affordable.
“Ford applauds the UK government for taking this step. We have been on the frontline of the conversation, highlighting the urgent need for consumer-based incentives for electric vehicles, and now they have arrived.”
Adam Wood, MD of Renault UK, which made the best-selling EV for private buyers in April and May, said: “These incentives are extremely welcome, and a much-needed signal that Government is ready to put tangible action behind the ambitious plans for the transition to electric vehicles that it has outlined.”
RAC head of policy Simon Williams said: “Three years after the arguably premature end of the plug-in car grant, this new scheme could be just the shot-in-the arm needed to help more drivers go electric.
“Within weeks, discounted cars should start appearing at dealerships across the country. And, as the biggest savings will be given to cars with the strongest ‘green’ manufacturing credentials, drivers will be picking models that are not only better for their wallets, but better for the planet too.”
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