UK government launches £650m grant to cut electric car prices
The UK government has announced a new £650 million grant scheme aimed at reducing the cost of electric vehicles (EVs) and encouraging more households to switch to fully electric cars.
The Electric Car Grant (ECG) will provide savings of up to £3,750 on new eligible electric cars priced at or under £37,000, targeting private buyers.
The scheme arrives more than three years after the previous Plug-in Car Grant was discontinued.
Consumers will receive the grant at the point of sale without needing to complete extra paperwork.
Applications from car manufacturers to include their zero-emission vehicles in the scheme opened on 16 July 2025.
Funding will be available until the 2028/29 financial year but may be amended or ended early if funds run out.
The scheme requires manufacturers to meet strict environmental criteria, including verified Science-Based Targets (SBT) and low embodied carbon scores.
Cars from manufacturers not meeting these standards will not qualify.
The greenest vehicles in the highest sustainability band can receive up to £3,750, while vehicles in a second band will get up to £1,500.
Transport Secretary Heidi Alexander said: “This EV grant 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. And with over 82,000 public charge points now available across the UK, we’ve built the infrastructure families need to make the switch with confidence. This is our Plan for Change in action. We’re backing British drivers, British jobs and British growth.”
The announcement has been welcomed by consumer and motoring groups. Simon Williams, head of policy at the RAC, 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.”
Sue Davies, head of consumer protection policy at Which?, said: “It’s good to see the government taking action to make electric vehicles more affordable. Electric vehicles perform well in Which?’s tests and are popular with drivers but our research has found that the upfront cost of buying an electric vehicle is a major barrier – and many drivers have a lack of confidence in the public charging infrastructure. To meet its 2030 ambitions, the government and chargepoint operators must also work together to ensure the UK’s charging infrastructure is up to scratch. Charging must be easy and reliable to support more people to make the move to an electric car.”
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