UK Government Unveils £650 Million Grant Offering Up to £3,750 Discount on New

The United Kingdom has today, July 15, 2025, ushered in a significant new era for electric vehicle (EV) adoption, with the government announcing a substantial £650 million Electric Car Grant (ECG) scheme. This landmark initiative aims to dramatically reduce the upfront cost of purchasing a new electric car, offering drivers discounts of up to £3,750 at the point of sale. The move, effective from tomorrow, July 16, 2025, is a crucial step in accelerating the nation's transition towards a greener automotive future and achieving its ambitious target of phasing out new petrol and diesel car sales by 2030.
For years, the initial higher purchase price of electric vehicles has been identified as a major deterrent for many potential buyers. This new grant directly addresses that concern, seeking to narrow the cost gap between traditional internal combustion engine (ICE) vehicles and their zero-emission counterparts. The scheme is designed to put more money back into the pockets of working families, making EV ownership more accessible than ever before. Beyond the initial discount, the government highlights that drivers can anticipate further savings of up to £1,500 a year in fuel and running costs compared to a petrol car, making the overall cost of ownership considerably more attractive.
The Electric Car Grant will apply to new eligible electric cars priced at or under £37,000. This price cap is strategically set to target a wide range of affordable and popular EV models, ensuring that the benefits of the grant are accessible to a broad segment of the population. Unlike previous schemes, the new ECG streamlines the process for consumers. The grant funding will be distributed directly to manufacturers who have successfully applied to include their eligible models in the scheme. This means that when a qualifying car is purchased, the discount will be applied automatically at the dealership, eliminating the need for drivers to navigate complex paperwork or application processes themselves.
The level of discount offered will be tiered, reflecting the government's commitment to promoting the most environmentally responsible manufacturing practices. The scheme will operate with two bands of support: the "greenest" cars, those that meet the highest manufacturing sustainability standards, will be eligible for the full £3,750 discount. Other eligible models, while still contributing to emission reductions, will qualify for a £1,500 discount. This tiered approach aims to incentivise manufacturers to adopt more sustainable production methods, including considerations for battery production emissions and vehicle assembly emissions, as well as the carbon intensity of electricity grids in manufacturing locations. Manufacturers will need to commit to a verified Science-Based Target (SBT) for cutting emissions to be eligible.
The reintroduction of this grant comes three years after the previous Plug-in Car Grant scheme was scrapped in June 2022. Its return has been widely welcomed by industry bodies and automotive manufacturers, who have long advocated for renewed government incentives to stimulate EV demand. The Society of Motor Manufacturers and Traders (SMMT) has hailed the announcement as a "clear signal to consumers that now is the time to switch," expressing optimism that it will provide a vital boost to the UK's automotive sector.
The £650 million funding allocated for the ECG is substantial and is set to be available until the 2028/29 financial year. However, the government has noted that the scheme will be subject to ongoing review and could see early closure if funds are exhausted. This "first-come, first-served" approach for manufacturers to get their vehicles approved underscores the urgency and anticipated demand for the scheme.
This latest initiative is part of a broader, concerted effort by the UK government to accelerate the transition to zero-emission vehicles and bolster related infrastructure. The ECG builds upon recent significant investments, including a £63 million package to support at-home charging for households without driveways, the electrification of NHS fleets with an £8 million allocation, and the creation of thousands of charge points at business depots across the country. Furthermore, a £25 million scheme has been announced to assist local authorities in implementing cross-pavement technology, allowing EV charging cables to safely run beneath pavements, a crucial development for urban residents without off-street parking.
While the new grant is expected to significantly increase EV adoption, some think tanks have suggested that while a step in the right direction, a portion of the funds may go to those who would have purchased an EV regardless. However, the prevailing sentiment is one of optimism, with many believing that the direct point-of-sale discount will be a powerful catalyst, encouraging thousands more drivers to make the switch to electric, ultimately contributing to cleaner air, reduced carbon emissions, and a more sustainable future for the UK. The coming months will undoubtedly reveal the full impact of this ambitious new Electric Car Grant on the nation's journey towards electrification.
Source@aBBC