The UK government has launched a brand-new Electric Car Grant, offering drivers up to £3,750 off the price of a new EV. The scheme, announced in Parliament by Transport Minister Heidi Alexander MP, is designed to make electric cars more affordable, boost sustainable manufacturing, and accelerate the UK’s transition to net zero.
How the New Grant Works
The scheme makes £650 million of funding available for drivers buying new EVs priced at £37,000 or under.
- £3,750 discount for the most sustainably produced models.
- £1,500 discount for EVs that meet minimum environmental standards.
The level of support depends on the sustainability of the car’s production, not just its price tag. This includes the carbon intensity of the electricity used in assembly and battery manufacturing, and whether the manufacturer holds a verified Science Based Target (SBTi) for emissions reduction.
Cars that don’t meet these minimum standards won’t qualify. Manufacturers must apply for their models to be approved, and the Department for Transport will update an online list of eligible vehicles as applications are processed.
When Did It Start
The Electric Car Grant applies to new vehicles ordered from 16 July 2025. Discounts will be applied automatically at the point of sale – meaning no paperwork for consumers.
The scheme is due to run until the 2028–29 financial year, though the government has warned it could be amended or closed early if the funding pot runs out.
Why It Matters
For drivers, this grant makes switching to electric more affordable than ever. Cutting up to £3,750 from the purchase price could be enough to bring dozens of popular EVs into budget for many households.
Combined with the ongoing running cost savings of EVs – up to £1,500 a year compared with petrol cars when charging at home – the grant represents a powerful financial incentive.
For manufacturers, it’s also a clear signal. By rewarding the cleanest production processes, the government is incentivising carmakers to decarbonise their supply chains, not just their tailpipes.
Salary Sacrifice and Leasing
The grant applies to salary sacrifice cars and leases, not just outright purchases.
- Choose £400 home charging credit, £400 off a home charger or £400 Electroverse credit
- Compatible with Octopus Energy's smart EV tariffs
- Approved Used vehicles available
- Early termination protection built into every lease
That means employees using salary sacrifice – already saving 20–50% on an EV by paying from their pre-tax salary – will see even bigger savings.
For leasing customers, the discount lowers monthly payments straight away, making EVs more competitive against petrol and diesel alternatives.
Other EV Grants in 2025
The Electric Car Grant isn’t the only support available to drivers this year. The UK government continues to offer several other schemes:
- EV Chargepoint Grant (EVCG): Up to £350 for flat owners and renters to install a home chargepoint (available until March 2026).
- Workplace Charging Scheme (WCS): Grants for businesses to install chargers for employees and fleets.
- Local Electric Vehicle Infrastructure (LEVI) Fund: Supports councils to roll out charging for residents without off-street parking.
Tax incentives also remain in place. From April 2025, EVs will pay just £10 Vehicle Excise Duty in their first year, and Benefit-in-Kind (BiK) rates will stay at a low 3% until 2025/26, rising gradually to 9% by 2030.
MORE> What is the WCS?
Boosting the UK’s Charging Network
Alongside the grant, the government announced a wider package of measures to support charging infrastructure, including:
- £25 million for cross-pavement charging channels, helping drivers without driveways.
- £30 million to install chargepoints at depots for vans, coaches and HGVs.
- £8 million for chargers at NHS sites.
- New rules to allow EV hubs to be signposted from major roads.
This comes on top of more than £6 billion in private investment already in the pipeline to expand the UK’s charging network by 2030.
The Bigger Picture
The Electric Car Grant marks the return of government purchase incentives, three years after the previous Plug-in Car Grant ended in 2022. This time, however, the focus is sharper: encouraging affordable EV adoption while also cleaning up the way cars are manufactured.
It’s a move that provides certainty to the auto industry, support for UK manufacturers, and a boost for consumers at a time when upfront costs remain one of the biggest barriers to EV ownership.
John is the Editor and Spokesperson for Electric Car Guide.
With over 20 years of writing experience, he has written for titles such as City AM, FE News and NerdWallet.com, covering various automotive and personal finance topics.
John’s market commentary has been covered by the likes of The Express, The Independent, Yahoo Finance and The Evening Standard.
