While the automotive landscape continues to evolve, the UK government has revealed a substantial £650 million Electric Car Grant scheme that promises to accelerate the shift to electric vehicles. From July 2025, eligible consumers will receive up to £3,750 off new electric vehicles priced at or below £37,000, with a structured approach that rewards greener models. The initiative aims to dramatically increase EV market share from the current one-in-four new car registrations to four-in-five by 2030, supporting the planned phase-out of new petrol and diesel vehicle sales.
The two-tier grant system offers £3,750 for the most environmentally friendly “Band One” vehicles, while others may qualify for £1,500. Certain Citroën models, including the e-C3 family and e-Berlingo, have already been confirmed for the £1,500 grant. Manufacturers, not consumers, must apply to have their vehicles included in the scheme, with approved models receiving automatic discounts at point of sale.
Government’s new grant offers £3,750 for top-tier EVs and £1,500 for others, with manufacturers managing application process and passing savings directly to buyers.
Alongside purchase incentives, the government is investing £63 million in charging infrastructure improvements. This targets a significant barrier to EV adoption – convenient charging access. The funding will support on-street and at-home charging solutions, particularly benefiting households without private driveways who could save up to £1,500 annually by accessing cheaper home electricity tariffs versus traditional fuel costs. The UK already has over 82,000 public chargepoints with new ones being added every 30 minutes on average. Similar to U.S. programs, the UK offers support covering a percentage of charging station installation costs to expand infrastructure nationwide.
The economics of EV ownership become increasingly compelling when combining these grants with existing incentives. The government is also allocating £8 million to electrify NHS fleets across over 200 sites, demonstrating commitment beyond personal transportation. Salary sacrifice schemes paired with the £3,750 grant can substantially reduce effective costs. The total cost of ownership analysis frequently favors EVs, with reduced maintenance requirements due to fewer moving parts and consistent operational savings.
Last year saw over 380,000 zero-emission vehicles registered in the UK, demonstrating growing market acceptance. The industry response has been cautiously positive, though some manufacturers have advocated for VAT reductions as a potentially more equitable approach.
The £37,000 price cap strategically focuses incentives on mass-market vehicles rather than premium models, potentially reshaping buying patterns in the affordable EV segment.
