The government is set to reduce the cost of certain new electric cars by up to £3,750 through new grants aimed at encouraging a shift from petrol and diesel vehicles.
Discounts will be available for eligible cars priced up to £37,000, with the largest reductions for the most environmentally friendly models, as stated by the Department for Transport.
Carmakers can start applying for the funding on Wednesday, and discounted vehicles should be available at dealerships soon.
The value of the new Electric Car Grant offered on each model will depend on sustainability criteria, which the government has yet to disclose. Cars deemed to be in “band one” will be discounted by the full £3750 while those in “band two” will receive up to £1500.
The spokesperson said bands (which could expand beyond two) are determined by how much CO2 is emitted in an EV’s production, assessing the energy used in vehicle assembly as well as battery manufacturing. Threshold levels have yet to be made public.
Discounts will vary from £1,500 to £3,750, and manufacturers will need to apply for each model to qualify for funding, which will be granted on a first-come, first-served basis. Once approved, the discount will automatically reflect in the car’s price at dealerships. A list of eligible vehicles is expected to be released shortly. The grants will be part of a £650 million initiative available over the next three years, while funding for EV charging points has also been announced.
The grant will only be offered to manufacturers that have verified science-based targets (SBTs) for carbon reduction and that have emissions scores below a threshold that the government has also yet to define.
When asked for clarification on these sustainability criteria and emissions scores, the spokesperson said: “An SBT [that we consider verified] is one that has been validated by the Science Based Target initiative [SBTi]. Scores are relative to an index based on the carbon intensity of different [power] grids.”
Ed – Sounds as clear as mud. And no Chinese made EVs.
The move comes as car makers are working to hit the UK’s Zero Emission Vehicle (ZEV) mandate, which this year requires them to achieve an EV sales mix of 28% or be fined £12,000 per non-compliant vehicle. So far this year, just under 25% of all new cars sold in the UK have been fully electric, prompting concern – although manufacturers can also trade reductions in their fleet emissions for de-facto ‘sales’ of electric cars.
The motor industry has also flagged that EV sales are being propped up by fleet buyers, which receive significant incentives in the form of benefit-in-kind tax breaks
Mike Hawes, chief executive of industry body the Society of Motor Manufacturers and Traders, has been one of the most vocal proponents for reintroducing an EV grant. He hailed the news as a “clear signal” for prospective buyers to go electric.
“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 [new cars sold] today, to four in five by the end of the decade,” he said.
Adam Wood, managing director of Renault UK, said the incentives are “extremely welcome” but called for further action to hit the 80% EV sales threshold for 2030 set out by the Zero Emission Vehicle (ZEV) mandate. “It remains critical that car makers, infrastructure providers and government remain united in delivering everything required to make that happen,” he said.
A spokesperson for Volkswagen Group UK said it was “pleased” the government was implementing a new grant because it signals a “clear direction of travel” towards battery-electric cars. However, they added it was too early to forecast the grant’s impact on its customers, given it has yet to receive full details from the government.
Lisa Brankin, managing director of Ford UK, said it was “great news” and that the grant “will help make the all-electric Puma Gen-E even more affordable”.
The government plans to ban the sale of new petrol and diesel cars by 2030.
The official Gov website spouts:
Drivers across the UK will soon enjoy discounts on dozens of new electric car models after the Transport Secretary today (15 July 2025) announced a £650 million grant scheme worth up to £3,750 per car, putting more money back in working people’s pockets as part of the Plan for Change and making owning an electric car a reality for thousands.
This latest scheme builds on the government’s major £63 million package to support at home charging for households without driveways, transition NHS fleets to electric and create thousands of chargepoints at business depots across the country.
In total, the government is investing £4.5 billion to turbocharge the switch to EVs, securing Britain’s position as a world-leader in electric vehicle adoption while helping put more money in people’s pockets. Today, the UK is already a global leader in the transition to zero emissions driving, with the largest EVmarket in Europe in 2024 and sales up a fifth on the previous year.
The latest update also comes as the UK hits over 82,000 public chargepoints nationwide – with one added every 30 minutes – giving peace of mind to drivers that they will be able to charge conveniently at home, work or on longer journeys.
This latest move comes alongside the Zero Emission Vehicle (ZEV) Mandate, which requires manufacturers to sell increasing percentages of zero emission vehicles each year. Recent changes to the mandate give industry the certainty, stability and support they’ve been asking for, alongside crucial trade deals with the US, India and the European Union following the recent global economic headwinds.
