UK announces new EV subsidies
Eligible vehicles must be zero-emission cars priced at or under £37,000 and produced according to the highest sustainability standards. The government has yet to provide more concrete criteria for the eligibility of electric cars. However, since “manufacturing sustainability standards” seem to be a deciding factor, it could be that UK-made vehicles have a better shot at being subsidised. It could also be a way to keep Chinese vehicles off the list, as China produces around 60 per cent of its electricity from coal. France has similar measures in place since 2024 – with similar results.
But back to the new subsidies in the UK: The Electric Car Grant is part of an overall £4.5 billion package to support the UK’s transition to zero-emission transport, with the government stating it will maintain Britain’s position as a leader in EV adoption after recording the largest EV market in Europe last year, with sales up 20% on 2023. Funding is secured until the 2028-29 financial year.
The ECG complements wider government measures to support EV uptake, including a £63 million package announced earlier this year to expand home charging for households without driveways, electrify NHS vehicle fleets, and deploy thousands of workplace chargepoints. The government also just announced DRIVE35, a new programme to finance a wide range of projects supporting the transition to manufacturing zero-emission vehicles from established high-volume production and gigafactories to startups, prototypes, and innovative automotive technologies.
The new purchase subsidies come alongside the Zero Emission Vehicle (ZEV) Mandate, requiring manufacturers to sell rising percentages of zero-emission vehicles annually. However, despite strong growth in recent months, the BEV market share so far this year, at 21.6%, remains significantly below the 28% required under the UK’s Zero Emission Vehicle mandate. According to SMMT, manufacturers have spent more than £6.5 billion since regulation commenced to sustain EV demand through discounting and tactical channel use. That is why the British trade association has been calling for new subsidies.
“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,” said SMMT CEO Mike Hawes. “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.”
Dan Caesar, CEO of Electric Vehicles UK, added: “A targeted incentive programme is a significant step forward in encouraging consumers to buy battery electric vehicles and to make them more accessible”
There were already rumours that the UK would introduce new purchase incentives. And the results are said to be quickly visible.
“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,” said Transport Secretary Heidi Alexander. “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. This is our Plan for Change in action.”
“Within weeks, discounted cars should start appearing at dealerships across the country,” commented Simon Williams, RAC head of policy.” 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.”
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