Just days after it earmarked extra funding for local councils to help with EV charging, the government has announced a new £650 million grant scheme that will bring discounts of up to £3,750 for a new electric car.
The scheme, dubbed The Electric Car Grant (ECG), effectively replaces the Plug-in Car Grant (PiCG) that was scrapped in 2022. The PiCG ran for 10 years and cost taxpayers £1.3bn by the time it ended.
The ECG has roughly half the total budget that was spent on the PiCG and is expected to run until 2028-29, with the Department for Transport warning it will “remain under review” and is subject to “amendment or early closure with no notice should funds become exhausted”.
The ECG tackles one of the more pronounced inequalities of EV ownership, with no incentives available for retail buyers since 2022. This is in stark contrast to those offered Salary Sacrifice cars by their employers, and enjoy tax incentives that effectively amount to discounts of 30-60% being applied to an electric car’s list price.
The ECG will be open to all retail buyers of EVs, though eligible cars must have a list price of £37,000 or less, while models must be registered with the scheme by manufacturers.
The grants will be offered at two levels: Band One will be for £3,750 and Band Two £1,500, with “sustainability criteria” determining which Band different models of EV fall into.
These criteria are likely to be linked to “to a verified Science-Based Target (SBT)” that car makers must commit to for a vehicle to be eligible for the scheme. This target will determine if a car’s “embodied carbon scores” meet certain thresholds, which are likely to be linked to the carbon intensity its manufacture entails.
Car makers can apply to join the scheme from 16 July 2025, while the grants themselves are set to begin being issued from 11 August. Funding for buyers will be allocated on a first-come, first-served basis, and consumers will not be required to do anything to take advantage of the grant, with all paperwork and administration shared between vehicle manufacturers, dealers and the government.
