New Electric Car Grant Explained: Up to £3,750 Off A New EV

Looking to switch to an electric vehicle (EV) but worried about costs? The UK government has introduced a new Electric Car Grant designed to make EVs more affordable and accelerate the transition to greener transport. With discounts of up to £3,750, this initiative is set to change the game for those considering an EV upgrade. Here, we break down the details of the scheme, who qualifies, and why it’s creating a buzz in the world of motoring.

What Is the Electric Car Grant?

The Electric Car Grant is a £650 million government initiative aimed at reducing the cost of new electric cars. If you’re planning to buy an EV priced under £37,000, you could be eligible for a grant of up to £3,750. This scheme is part of the UK’s Plan for Change, which aims to promote zero-emission vehicles and reduce household carbon footprints.

Eligible cars will fall into two tiers:

• Full Discount (£3,750): For the greenest models that meet high eco-standards.
• Partial Discount (£1,500): For cars that meet certain sustainability criteria but don’t quite hit the top eco-marks.

Nearly 50 electric models are expected to qualify, with more being added as manufacturers align with sustainability goals.

How Does It Work?

There’s no need to jump through hoops for this grant. The discount is automatically applied at dealerships for eligible vehicles.

The programme is set to run until the 2028/29 financial year, with funding expected to support approximately 173,000 car purchases at the full discount level.

Why It Matters for EV Buyers

The high upfront cost of electric cars has long been a barrier for many potential buyers. Government incentives like this one aim to make EVs more accessible. By reducing the initial costs, this grant provides a stronger incentive for households to ditch petrol and diesel cars in favour of electric ones.

Beyond the discount itself, driving an EV comes with significant long-term savings:

• Running Costs: EV drivers can save up to £1,500 per year on fuel and maintenance compared to traditional petrol cars.
• Tax Benefits: Lower road tax rates and other financial perks add to the benefits.
• Eco-Friendly Advantages: Fewer emissions mean a smaller carbon footprint for your household.

With over 82,000 public charging points available across the UK and more being installed every day, the infrastructure for EVs is rapidly expanding, making them an even more practical choice.

What Are Buyers Saying?

While the Electric Car Grant is undoubtedly a step in the right direction, buyer sentiment suggests a mixed reaction. Here are the key findings from MOTORS’ recent survey:

• Interest in EVs is Growing: 38% of new car buyers say the grant makes them more likely to choose an EV. This number climbs to 65% among those under 35 and 62% among hybrid drivers.
• Used Buyers Are Also Considering EVs: Overall, 48% of respondents – including potential used EV buyers – now feel more inclined to go electric.
• VAT on Charging is a Bigger Issue: 60% of buyers feel the government should have focused on cutting VAT for public charging (currently 20%) instead of introducing a purchase grant. This would bring it in line with the 5% VAT on domestic electricity.
• Uncertainty Over Long-Term Impact: Only 38% of car buyers believe the grant will be sufficient to impact their purchase decisions before the scheme ends.

Lucy Tugby, Marketing Director at MOTORS & Cazoo, explains, “The Electric Car Grant is a welcome move, but our research shows many consumers feel that reducing public charging costs would have been a bigger motivator. That said, nearly half of all buyers are now considering EVs, so the grant is fostering greater interest overall.”

Eligibility Criteria for the Electric Car Grant

To take advantage of this grant, the vehicle you purchase must:

1. Be fully electric.
2. Cost under £37,000.
3. Be produced by car brands committed to meeting Science-Based Targets (SBT) for emissions reductions.

Examples of eligible models include budget-friendly options like the Dacia Spring (from £14,995) and mid-range favourites like the Volkswagen ID.3 (from £30,860). Some high-performing EVs may only qualify for partial discounts, depending on their eco-ratings.