While the UK government reaffirms its commitment to the 2030 petrol and diesel ban, a new Electric Car Grant scheme has been revealed offering up to £3,750 off new zero-emission vehicles priced under £37,000. The £650 million program, secured through the 2028-2029 financial year, forms part of a broader £4.5 billion investment supporting the UK’s shift to cleaner transport options. Similar to the U.S. program, these incentives focus on mainstream vehicle adoption rather than luxury models.
Manufacturers can apply to join the scheme from July 16, 2025, with customer discounts becoming available at point of sale from August 11. The eligibility criteria are particularly stringent, focusing on vehicles meeting the highest manufacturing sustainability standards—a requirement that may favor UK-produced models. The scheme operates on a first-come, first-served basis for manufacturer applications, potentially creating competition among automakers to secure funding quickly. This approach mirrors recent French policies limiting subsidies to cleanly manufactured vehicles.
The UK’s EV market has shown remarkable resilience, with over 380,000 zero-emission cars registered in the previous year—establishing Britain as Europe’s largest EV market with 20% growth over 2023. The government aims to increase EV market share from the current one in four new vehicles to four in five by decade’s end. The transition includes plans for NHS fleet electrification as part of the government’s broader initiative.
Industry response has been mixed. The financial incentive is welcome, but critics point to a disconnect in policy. EVs will be subject to Vehicle Excise Duty from April 2025, with premium models over £40,000 incurring an additional £425 annually for five years. I’ve noticed this simultaneous introduction of subsidies and taxes sends conflicting signals to consumers.
The grant’s narrow focus on new vehicle prices without addressing charging infrastructure—consistently cited as the primary adoption barrier—is perhaps its greatest shortcoming. Rural areas and the used EV market receive little attention in this scheme.
Nevertheless, the program should bolster UK manufacturing while making zero-emission vehicles more accessible. With current EV adoption trending upward, this targeted financial incentive—despite its limitations—may provide enough momentum to maintain the UK’s European leadership position in the shift to electric mobility.
