Government unveils £3,750 electric car discount to boost EV adoption

Drivers across the UK are set to benefit from significant savings on electric vehicles (EVs), following a major government announcement today unveiling a £650 million Electric Car Grant (ECG) that will slash the cost of eligible new EVs by up to £3,750.

The new scheme, part of the government’s broader Plan for Change, aims to accelerate the transition to zero-emission transport, support British manufacturing, and put more money back into working people’s pockets. Starting 16 July 2025, car manufacturers can apply for the grant, which will apply to new electric vehicles priced at or below £37,000, provided they meet the highest manufacturing sustainability standards.

Building on (and improving) past incentives

The new scheme comes three years after the previous, Conservative-led government axed the Plug-in Car Grant (PiCG), which offered a fixed £1,500 off list prices on EVs priced below £32,000. In contrast, the value of the new Electric Car Grant will vary by model and be tied to sustainability criteria, though the government has not yet disclosed full details.

Eligibility will be restricted to manufacturers that have verified science-based targets (SBTs) for carbon reduction and emissions scores below a government-defined threshold, which is also yet to be announced. Funding will be allocated on a first-come, first-served basis, and a list of qualifying models will be published in the coming weeks.

Transport Secretary Heidi Alexander said the grant would make electric cars more affordable and further position the UK as a leader in the clean transport revolution:

“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.”

The automotive industry has welcomed the initiative, calling it a much-needed catalyst for electric car adoption.

Mike Hawes, Chief Executive of the Society of Motor Manufacturers and Traders (SMMT), said: “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 1 in 4 today, to 4 in 5 by the end of the decade.”

Ian Plummer, Commercial Director at Auto Trader, agreed that affordability is central to adoption:

“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.

With 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.”

Building on EV charging announcement

The news follows a weekend announcement of further investment in EV infrastructure, including support for on-street charging and improved signage on major roads, a move that was strongly welcomed by the UK charging industry.

Vicky Read, CEO of ChargeUK, praised the timing of the dual announcements: “This announcement is brilliant news – for drivers and for the UK’s transition to electric vehicles.

“Hot on the heels of the weekend’s announcement on measures to support charging, including meeting ChargeUK’s calls for improvements to signage on main roads, today’s package is another vital boost to the charging industry, helping it invest with confidence.”

A win for drivers and the environment

The government estimates that the grant, combined with reduced running and maintenance costs, could save drivers up to £1,500 a year compared to a petrol vehicle. With 380,000 zero-emission cars registered last year, today’s announcement is designed to accelerate the UK’s transition to electric, supported by measures such as the Zero Emission Vehicle (ZEV) Mandate and recent international trade agreements.

With over 82,000 public chargepoints already in place, and one being added every 30 minutes, today’s measures aim to remove two of the biggest perceived barriers to EV adoption: cost and convenience.

As Simon Williams of the RAC put it: “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.”

With funding in place until 2028-29, the Electric Car Grant is set to play a key role in helping the UK meet its 2030 target to phase out new petrol and diesel cars.