The UK government has launched a new Electric Car Grant, effective from 16 July 2025, offering up to £3,750 off the purchase of eligible electric vehicles (EVs) priced at or below £37,000. Backed by £650m in funding, this initiative is designed to reignite consumer interest in EVs and support the UK’s transition to zero-emission transport.
What’s new?
Unlike the previous Plug-in Car Grant (PiCG), which offered a flat £1,500 discount, the new scheme introduces a tiered system based on sustainability criteria:
- Band One: full £3,750 discount for EVs with low carbon emissions in production
- Band Two: up to £1,500 for vehicles with higher emissions.
Eligibility is determined by factors such as:
- CO₂ emissions during manufacturing, including battery production
- energy sources used in vehicle assembly
- Science Based Targets (SBTs): Only manufacturers with verified SBTs for carbon reduction can participate.
What it means for automotive businesses:
- manufacturers must apply to have their vehicles included in the scheme
- retailers can expect increased demand from private buyers, especially as the grant is applied automatically at point of sale
- UK-made vehicles are not given preferential treatment, but sustainability performance is key.
This comes at a critical time, as the industry faces pressure to meet the Zero Emission Vehicle (ZEV) mandate, requiring 28% of new car sales to be electric in 2025.
What should you do?
- Review your EV portfolio: Ensure models meet sustainability benchmarks
- Engage with the grant process: Apply for inclusion and prepare marketing materials
- Educate your customers: Promote the financial and environmental benefits of switching to electric.
This grant is a strategic opportunity for automotive businesses to align with the UK’s green agenda and support the shift to cleaner transport. For tailored advice on your sustainability strategy contact the UHY Hacker Young sustainable business services team.
