The new Electric Car Grant (ECG) will offer discounts of between £1,500 and £3,750
Thousands of motorists are set to witness dramatic price cuts of up to £3,750 on new electric vehicles through a government initiative designed to ignite a motoring transformation. Labour’s Transport Secretary, Heidi Alexander, announced the return of subsidies for eco-friendly cars – axed by the Tories three years ago – declaring the policy would enable “people keep more of their hard-earned money” whilst delivering a vital shot in the arm for Britain’s automotive sector.
Crucially, budget Chinese EVs, including those manufactured by BYD, will be excluded from the discount programme, which is also anticipated to reduce prices for used battery-powered vehicles. The fresh Electric Car Grant (ECG) will provide reductions ranging from £1,500 to £3,750 on battery-operated models costing up to £37,000, with the largest rebates reserved for the most eco-conscious cars.
Motor manufacturers can start submitting applications to register their vehicles under the programme from Wednesday, with dealership savings projected to materialise “within weeks”, the RAC has indicated. This development arrives as the Government seeks to fast-track the transition from petrol and diesel ahead of its 2030 prohibition on new combustion engine sales.
Ms Alexander declared: “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.”
However, the announcement has sparked a political clash last night, with Shadow Transport Secretary Gareth Bacon cautioning: “Labour are forcing families into more expensive electric vehicles before the country is ready. EVs are a product people demonstrably do not want. Labour are putting net zero ahead of common sense and ahead of the family finances.”
The Department for Transport (DfT) defended the scheme – bolstered by £650 million over three years – asserting it will reduce ownership costs and aid middle-income households in transitioning. A spokesperson stated: “The discount means that zero emission cars are now cheaper to buy and run than ever before, and comes on top of preferential tax rates, delivering real savings for working families.”
According to the regulations, manufacturers – not consumers – must register their models, ensuring discounts are automatically applied at the dealership without additional paperwork. However, the scheme introduces a two-tier system based on the “sustainability” of manufacturing – meaning only the greenest models will qualify for the full £3,750 discount, while others will receive as little as £1,500.
The DfT explains that the carbon footprint of production, including battery assembly and factory energy use, will determine each model’s “band” under the grant.
Industry figures have cautiously welcomed the move. Mike Hawes of the Society of Motor Manufacturers and Traders (SMMT) said the grants were “a clear signal to consumers that now is the time to switch”.
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Simon Williams from the RAC added: “This is just the shot-in-the-arm needed to help more drivers go electric.”
Ford, Renault and Kia are among carmakers expected to benefit from the reintroduced subsidy.
Lisa Brankin, the boss of Ford UK, praised the move, stating: “Ford applauds the UK Government for taking this step… reducing the cost of sub-£37k electric cars by up to £3,750 is great news for UK drivers.”
However, many drivers continue to have concerns about infrastructure. Vauxhall’s managing director, Steve Catlin, shared industry figures, saying: “The target this year is 28%. At the moment we’re running at 21.6% as an industry.”
He pointed out a significant barrier to EV adoption: “40% of households in the UK don’t have a driveway, therefore, they’re less likely to have a home charger and, therefore, they’re less likely of course to buy an electric car on that basis.”
Catlin also emphasised the need for “increasing consumer demand and creating more charging points”, noting that the current number of public chargers, 82,000, falls significantly short of the Government’s 2030 target of 300,000.
Last weekend, Ms Alexander pledged an extra £63 million to fund new EV charge points. Edmund King, AA president, said; “We welcome this positive move to help boost the uptake of EVs. A grant of up to £3,750 is to be celebrated and we urge drivers to take full advantage of this offer.
“Alongside the £63 million investment package to help sign the way to charging hubs on motorways and major A-roads, as well as helping fund drivers with no dedicated off-street parking to install pavement gullies so they can charge from home, this is a supercharged effort to accelerate the electric revolution.”
How the grant works
- Applies to new fully electric cars priced up to £37,000
- Available for three years, subject to change if funds run out
- Grants are given to manufacturers, not buyers
- Buyers get the discount automatically at the point of sale
- Full £3,750 applies to models with highest environmental credentials (band one)
- Lower grants of around £1,500 apply to less sustainable models (band two)
