What Are the New EV Grants?
The UK government has committed £650 million in grant funding to assist buyers of new zero-emission cars priced at £37,000 or less. The grants are available to both private customers and businesses and will run until at least the 2028/29 financial year (or until funds are exhausted).
There are two grant bands:
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£3,750 grant: For vehicles produced to the highest sustainability standards, including low-carbon assembly and battery manufacturing.
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£1,500 grant: For vehicles that meet verified environmental criteria but don’t reach the highest sustainability band.
Eligibility is determined and approved by the Department for Transport, with only models meeting stringent environmental benchmarks—such as science-based emissions reduction targets and low-carbon manufacturing processes—receiving grant funding. The grant design takes into account not just tailpipe emissions, but the full lifecycle emissions of manufacture and assembly, reflecting a holistic approach to carbon reduction.
The scheme is open to all qualifying new zero-emissions vehicles, and manufacturers can apply for eligibility from July 16, 2025.
What Do the Grants Apply To?
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New zero-emission cars priced at or below £37,000.
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Grants are awarded only to vehicles and manufacturers that meet minimum environmental and sustainability standards.
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The higher grant (£3,750) is reserved for vehicles manufactured under the strictest measures for sustainability, further incentivizing automakers to improve their supply chains and production.
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Vehicles must be on the Department for Transport’s approved list to qualify, and this list will be updated regularly as new models are assessed.
A parallel set of grants also targets commercial vehicles—such as vans, HGVs, and wheelchair-accessible vehicles—with up to £5,000 off large electric vans and revised price caps to reflect current market realities.
Industry Effects and Broader Policy
These new grants dovetail with a suite of policies driving EV adoption:
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The Zero Emission Vehicle (ZEV) mandate requires 28% of new car sales to be zero-emission in 2025, rising sharply toward 2035.
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Charging infrastructure is being massively expanded, with the UK surpassing 80,000 public charging points and billions earmarked for further deployment.
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Charging support includes £25 million for cross-pavement residential charging, £30 million for depot installations, and £8 million for NHS sites.
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Businesses retain access to 100% first-year capital allowances for EVs and charge points until March 2026, offering substantial tax relief.
Changes and Challenges
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April 2025 saw the end of the Vehicle Excise Duty (road tax) exemption for EVs, introducing modest annual charges for new and existing owners and a higher supplement for luxury EVs.
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Congestion charge exemptions for EVs in zones like central London will end in late 2025.
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Regional disparities remain in infrastructure, with Greater London and Scotland leading, while Wales and Northern Ireland lag in charger rollout.
Impact on the Industry
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The grants reinforce affordability, helping many mainstream EVs compete with petrol and diesel models as incentives offset higher sticker prices.
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The sustainability focus compels automakers to clean up supply chains, invest in greener production, and meet science-based climate targets to qualify for the highest grant tier.
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Commercial EV adoption is supported, with grants and targeted infrastructure helping fleets transition cost-effectively.
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As EV adoption grows mainstream, incentives are evolving from blanket subsidies to more targeted support—rewarding sustainability and broader access, and balancing fiscal responsibility with climate ambition.
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The end of some purchase and local incentives, and the introduction of new road taxes, signal the government’s intent to normalize EV ownership as the new standard, rather than subsidize early adopters indefinitely.
Conclusion
The 2025 EV grants represent a sophisticated, sustainability-driven evolution of electric vehicle support. By focusing on the full life-cycle impact of automotive production and aligning incentives with the cleanest supply chains, the scheme creates powerful incentives for automakers to innovate. The combination of financial assistance, regulatory targets, and infrastructure investment is set to keep the UK on track for its net-zero targets—while ensuring affordable, accessible, and sustainable mobility for the future.
