10:31 pm, July 14, 2025
The Government has announced a new £650m Electric Car Grant which aims to make new EVs more affordable to everyday buyers.
Car Dealer earlier reported that the ‘final touches’ were being put on a subsidy scheme in response to long-running industry calls for additional support.
It has now been revealed that Labour has signed off on a bumper package of measures, which effectively replace the Plug-In Car Grant, which was ditched by the Tories in 2022.
Ministers say that the new package of subsidies will reduce electric car prices by up to £3,750 for eligible new electric vehicles priced at or below £37,000.
Discounts will be available at the point of sale starting from tomorrow (July 16) with funding available until the 2028/29 financial year.
The Department for Transport says that amounts will be based on a car’s ‘sustainability criteria’ with the greenest ‘band one’ vehicles eligible for the full amount of £3,750.
Meanwhile, band two vehicles will receive up to £1,500.
Confirming the news, 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 chargepoints now available across the UK, we’ve built the infrastructure families need to make the switch with confidence.’
In response to the announcement, Conservative shadow transport secretary Gareth Bacon accused the Government of “’orcing families into more expensive electric vehicles before the country is ready’, adding the reintroduction of grants would mean ‘more pain for taxpayers’.
He said: ‘Last year, only one in 10 private purchases of new cars was electric. This is a product people demonstrably do not want.
‘Last week, the Office for Budget Responsibility made clear the transition to EVs comes at a cost, and this scheme only adds to it. Make no mistake: more tax rises are coming in the autumn.’
How has industry reacted?
‘Now is the time to switch’
‘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.
‘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 today, to four in five by the end of the decade.
‘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.
‘Taken with recent announcements regarding infrastructure investments and the Industrial Strategy, the UK has the opportunity to maintain its position as a leader in both the manufacture and sale of zero emission vehicles.’
Mike Hawes, SMMT chief executive
‘Our calls have been heard’
‘We welcome this positive move to help boost the uptake of EVs. A grant of up to £3,750 is to be celebrated and we urge drivers to take full advantage of this offer.
‘The AA’s Motoring Manifesto and EV Viewpoint were clear that drivers are merely hesitant about the move to EV’s, with price being a barrier to ownership. We have campaigned for incentives to help overcome this issue, and are pleased our calls have been heard.
‘Alongside the £63m investment package to help sign the way to charging hubs on motorways and major A-roads, as well as helping fund drivers with no dedicated off-street parking to install pavement gullies so they can charge from home, this is a supercharged effort to accelerate the electric revolution.’
Edmund King, AA president
‘Grants make it easier for more people to make the switch’
‘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.
‘Although this support is only for new EVs, it’s likely the momentum and attention will see even more consumers considering used electric cars too as we know the majority, almost nine in 10, of electric buyers cross-shop.
‘Following the trail of yesterday’s announcement, electric share of new and used markets combined hit a 2025 high of 8% highlighting this halo effect.
‘With used EVs generating 15 times more sales enquiries than new EVs, and the volume of used EV enquiries on Auto Trader growing 92% since June 2023, it’s clear the used market will be key to unlocking mainstream adoption and so all retailers should be able to capitalise on the broader opportunity this week’s announcement offers.’
Ian Plummer, Commercial Director at Auto Trader
‘Support is aimed exactly where it’s needed most’
‘Nearly one in two new electric models are now more affordable thanks to these long-overdue incentives.
‘Crucially, the support is aimed exactly where it’s needed most: from school-run staples to budget-friendly runarounds, the grants apply to cars that fit the needs of everyday drivers.
‘In our latest survey of 11,000 UK drivers, 76% told us upfront cost is the biggest barrier to making the switch. These returning incentives are the spark the private market needs to reignite momentum and give even more drivers the confidence to go electric.’
Ginny Buckley, chief executive of Electrifying.com
‘New scheme could be just the shot-in-the arm needed’
‘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.
‘This is further welcome news following last week’s announcement about more funding for pavement gully charging solutions that will enable those without driveways to charge an EV at home.
‘Together, these initiatives should mean more drivers than ever start benefitting from the lower costs of running an electric car.’
Simon Williams, RAC head of policy
‘Funding will help address key barriers’
‘The UK Government’s £63m investment in EV charging infrastructure is a promising commitment to achieving its EV goals and closing the charging gap.
‘By targeting households without driveways, as well as NHS trusts and fleet depots, this funding will help address key barriers and bring clean transport closer to everyone.
‘As demand for EVs surges, charging infrastructure must keep pace. With the 2030 Zero Emission Vehicle (ZEV) mandate fast approaching, this announcement is a step in the right direction, but much bolder action is needed – and quickly.
‘Ongoing collaboration between industry, local authorities, and government is crucial to future-proofing the network.
‘This includes scaling smart charging, investing in workforce skills, and ensuring a reliable, accessible charging experience to help achieve the UK’s net zero goals.
‘It’s good to see this step, but ongoing effort and partnership will be key to long-term success.’
Antoine Picron, director – Europe public policy at ChargePoint
‘Focusing £650m entirely on new vehicle sales seems short-sighted’
‘The Government’s new £650m Electric Car Grant, offering up to £3,750 off new electric cars priced under £37,000, looks good in a headline but in reality, it feels like another policy designed to help car manufacturers far more than ordinary drivers.
‘At a time when an overwhelming majority of households buy used cars rather than new, focusing £650m entirely on new vehicle sales seems short-sighted.
‘There’s nothing here for used EV buyers – no support for those looking to switch from older, higher-polluting petrol and diesel cars to more affordable second-hand electric vehicles. If cutting emissions is the goal, wouldn’t helping these drivers make the most difference?
‘In short, while this new grant will help some drivers, it’s hard to ignore the sense that industry lobbying has won out over strategic thinking.
‘Supporting electric cars is essential – but this scheme feels more like a quick headline win than a real plan for change.’
Stuart Masson, editorial director of The Car Expert
