Car buyers to save thousands as EV grant returns

15th Jul 2025

New electric vehicle (EV) owners across the UK are set to enjoy savings up to £3,750, following today’s (Tuesday 15th July) announcement by the Transport Secretary of a new £650m grant initiative.

The scheme offers electric car buyers money off eligible EVs, and is designed to support families as part of the Government’s Plan for Change – with the aim of making EV ownership more accessible.

Today’s announcement of the Electric Car Grant (ECG) will support discounts at the point of sale at dealerships on new electric cars priced up to £37,000. Vehicles above this threshold will not qualify for the ECG discount.

The Government says the EV funding will remain in place until the 2028/29 financial year.

The value of the new Electric Car Grant available for each model will be based on sustainability criteria that the Government has not yet revealed.

EVs classified under 'band one' will qualify for the full £3,750 discount, while those in 'band two' will receive up to £1,500.

The bands will be determined by the level of CO2 emissions during the production process.

Transport Secretary Heidi Alexander said: "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.

"And with over 82,000 public chargepoints now available across the UK, we've built the infrastructure families need to make the switch with confidence. 

"This is our Plan for Change in action. We're backing British drivers, British jobs and British growth." 

The Government stated that it is investing £4.5bn to accelerate the shift to electric vehicles, and the ECG was the next step in their plans.

RAC head of policy Simon Williams said: “Within weeks, discounted cars should start appearing at dealerships across the country. And, as the biggest savings will be given to cars with the strongest ‘green' manufacturing credentials, drivers will be picking models that are not only better for their wallets, but better for the planet too.

“This is further welcome news following last week's announcement about more funding for pavement gully charging solutions that will enable those without driveways to charge an EV at home.

“Together, these initiatives should mean more drivers than ever start benefitting from the lower costs of running an electric car."

The announcement comes three years after the Conservative government axed the plug-in car grant, which gave car buyers a £1500 discount when buying a new EV.

The scheme supported the sale of nearly half a million electric cars across the UK over an 11 year period – at a cost of around £1.4 billion.

According to data from the Society of Motor Manufacturers and Traders (SMMT), battery electric vehicles make up around 22% of all new cars sold in the UK, with 224,841 new electric cars registered from 1 January to 30 June.

Petrol remains the most popular powertrain choice for buyers in 2025, with 504,840 new cars registered in 2025 - a figure that makes up 48% of all new cars sold in the UK from 1 January to 30 June.

“Today’s announcement of the return of government support for the purchase of electric vehicles is a clear signal to consumers that now is the time to switch,” said Mike Hawes, SMMT Chief Executive.