Government grants for buying electric cars are to be reintroduced for the first time since the previous scheme was scrapped in 2022.
The Government has announced a new £650 million Electric Car Grant designed to lower the upfront cost of electric vehicles for drivers across the country.
Under the scheme, eligible new electric cars priced at £37,000 or below will qualify for a discount of up to £3,750, applied directly at the point of sale.
Set to launch on 16th July, car manufacturers can apply to have their zero-emission models included in the scheme, with funding available until the 2028/29 financial year.
This measure is expected to address one of the main barriers to EV adoption: the higher initial purchase price compared to petrol vehicles. By narrowing this cost gap, the government hopes to expand access to cleaner vehicles and help more drivers benefit from lower long-term fuel and maintenance costs.
Three years ago we reported that price parity between EVs and their internal combustion engined equivalent was expected to be reached by 2027. Early last year, New Automotive speculated that it might now be arrived at in 2026 and not long after that Vauxhall announced that their new Frontera Electric and Frontera Hybrid would both be available at the same list price.
Transport Secretary Heidi Alexander described the grant as part of a wider effort to support the UK automotive sector and promote low-emission transport. She said the scheme will not only reduce costs for consumers but also help the sector take advantage of long-term opportunities in the shift to electric vehicles.
The ECG builds on previous government support, including a £63 million package to improve charging infrastructure and funding for the electrification of NHS fleets. In total, £4.5 billion is being invested in the transition to electric vehicles, aimed at improving infrastructure, supporting industry and making cleaner transport more accessible for UK drivers.
Owning and buying an electric vehicle (EV) is becoming cheaper, with two in five of used electric cars sold at under £20,000 and 34 brand new electric cars available from under £30,000.
Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), said: ‘NFDA welcomes the Government’s action to boost the electric vehicle market. We have continuously called for urgent measures to incentivise EV uptake, including improving charging infrastructure and providing financial incentives such as the former plug-in grant.
‘The Government has taken positive steps in building a constructive relationship with the automotive industry who have voiced concerns over the ZEV Mandate’s ambitious targets.’
RAC head of policy Simon Williams said: ‘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.’
Dan Caesar, CEO, Electric Vehicles UK added: ‘A targeted incentive program is a significant step forward in encouraging consumers to buy battery electric vehicles, and to make them more accessible. While battery-only EVs are much cheaper to buy and run than most realise, surveys show that cost misperceptions are the primary reason for hesitance.
‘A generous grant, of this nature, gives a new group of interested buyers, that might have thought that going electric was beyond them, a gentle nudge into what is great tech. More than 9 out of 10 battery EV drivers will never revert, and there’s a reason for that.’
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