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The Electric Car Grant is here: Government's new £3,750 EV discount in detail

The government has set out its plan to help reduce the cost of affordable EVs by introducing a new £3,750 Electric Car Grant for new EVs sold under £37,000

Auto Express creative director Darren Wilson charging the Lexus RZ

Electric cars are about to get more affordable after the UK government announced the relaunch of an EV grant scheme which will cut the price of a new zero-emissions car by up to £3,750.

The new Electric Car Grant (ECG) will be available on EVs costing under £37,000 and only those models from manufacturers that have committed to a so-called Science-Based Target (SBT) for emissions and have already showcased reductions because of this.

The ECG will be available in two tiers; cars deemed the most environmentally friendly will be eligible to receive the full £3,750 discount, while those not quite deemed green enough will instead be discounted by £1,500. As only cars costing under £37,000 will qualify, the UK’s best-selling EV, the Tesla Model Y is among a large list of EVS not in-line for government grants.

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The £650 million total funding for the EV grant would be enough to subsidise around 173,000 electric car purchases at the maximum grant amount of £3,750 per vehicle. That's about half the total number of EVs registered in the UK last year.  

Unlike the old Plug-in Car Grant that closed in 2022, manufacturers must apply for their vehicles to receive the government ECG payments. Auto Express is awaiting clarification on how individual models will be rated in terms of how sustainable they are, but a full list will eventually be available on the government website.

Will the Electric Car Grant work?

The aim of the Electric Car Grant is to boost sales of new EVs in the UK, particularly to private buyers who have been reluctant to make the switch. The re-introduction of the grant has been well-received across the industry, with Renault’s managing director, Adam Wood calling it a “much-needed signal that Government is ready to put tangible action behind the ambitious plans for the transition to electric vehicles (EVs) that it has outlined.”

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The AA said it is “pleased [its] calls have been heard”, while CEO of charging firm InstaVolt, Delvin Lane, claimed the government’s announcement “could not [have] come at a better time.”

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An Auto Express poll of over 1,300 respondents, carried out with our parent company Carwow, has indicated a positive response from the car buying public. 51 per cent said they were in favour of the Government offering grants to make EVs more affordable with a further 19 per cent undecided. 

40 percent said that the potential £3,750 discount would make them more likely to consider buying an electric car in the next 12 months and another 27 per cent said that it may do.

Which cars will be eligible for the EV grant?

Just under 50 new electric car models would be eligible for the EV grant, if their makers pass the necessary criteria, with more becoming clear in the coming days. 

There are also a number of electric cars that are just outside the £37,000 threshold and manufacturers will be reviewing whether to lower the prices on these models in order to qualify. 

We have also seen heavy discounting on new electric cars over recent months through our Find A Car service, with manufacturers keen to boost demand. The grant will be applied on the car's recommended retail price (RRP) but it is likely that some level of discounts will remain in place in addition to the new EV grant, in many cases.

Many EVs narrowly miss out on the £37,000 cut-off point for EV grant eligibility, including the Vauxhall Grandland Electric (£37,355), the Renault Scenic (£37,195) and the BYD Atto 3 (£37,705). Manufacturers of EVs in the £37k to £40k price bracket are sure to be looking at their pricing structures with a view to bringing the starting prices down and qualifying for the grant. 

Every EV that could get the EV grant

Below are the UK's cheapest electric cars under the £37,000 price ceiling for the EV grant. These models could qualify for the grant if they meet the sustainability criteria. 

 Car namePrice from Car namePrice from
1Dacia Spring£14,99526Peugeot e-208£30,150
2Leapmotor T03£15,99527BYD Dolphin£30,205
3BYD Dolphin Surf£18,65028Volkswagen ID.3£30,860
4Fiat Grande Panda£21,03529Citroen e-Berlingo£31,240
5Citroen e-C3£22,09530Toyota Proace City Verso EV£31,995
6Renault 5£22,99531Peugeot e-Rifter£32,250
7Hyundai Inster£23,00532Vauxhall Mokka Electric£32,430
8Citroen e-C3 Aircross£23,09533Renault Megane E-Tech£32,495
9Vauxhall Frontera Electric£23,99534MINI Countryman Electric£33,005
10GWM Ora 03£24,99535Kia EV3£33,005
11Fiat 500e£25,03536Volvo EX30£33,060
12Vauxhall Corsa Electric£26,78037Omoda E5£33,065
13MINI Cooper Electric£26,90538Alpine A290£33,500
14Renault 4£26,99539Alfa Romeo Junior Elettrica£33,906
15MG4£26,99540Smart #3£33,960
16Citroen e-C4£27,65041Vauxhall Astra Electric£34,130
17MGS5 EV£28,49542Hyundai Kona Electric£34,500
18Citroen e-C4 X£28,71543Peugeot e-2008£35,400
19MINI Aceman£28,90544Cupra Born£35,690
20Smart #1£29,96045Vauxhall Grandland Electric£36,455
21Abarth 500e£29,98546MG4 XPower£36,495
22Ford Puma Gen-E£29,99547Leapmotor C10£36,500
23Jeep Avenger£29,99948Abarth 600e£36,985
24Suzuki e-Vitara£29,99949KGM Torres EV£36,995
25Fiat 600e£30,03550Skywell BE11£36,995

How will the Electric Car Grant impact the used car market?

Values of used electric cars have been a major issue for the car industry in recent years. High list prices and heavy discounting of new cars, as well as the rapid development of EV technology, have pushed used values down, causing a real headache for owners and companies trying to move three-year-old electric models off their books. 

The ECG is likely to bring further downward pressure on prices for used cars in the short and medium term. This is good news for used buyers but heavy depreciation could actually increase the price of finance deals for new car buyers, off-setting the impact of the Electric Car Grant itself. 

British Vehicle Rental and Leasing Association chief executive, Toby Poston, says that: "Further stimulating new EV registrations without supporting the used market risks creating an even greater supply/demand imbalance, putting even more pressure on fast deflating second-hand values. The resulting losses will erode confidence and result in higher finance costs for new EVs, eliminating much of the benefit from the original grant.”  

Easier home charging

The announcement of the new Electric Car Grant came with other good news for the EV market. The government has also invested £25 million to aid private councils in installing cross-pavement charging solutions; these so-called ‘gulleys’ involve digging a small trench into the pavement in which a flap will be installed, allowing a charging cable to be draped across the road without becoming a trip hazard.

Co-founder of cross-pavement charging solution firm, KerboCharge, Michael Goulden, said he was “delighted by the news of the Government grant”, stating that it “demonst[es] the Government’s backing for cross-pavement charging and subsidising the cost for tens of thousands of UK households.”

Clearer signage for public charging hubs

That £25 million comes as part of a larger £63 million lump sum towards building appropriate signage for EV charging stations, something founder of campaign group, FairFuel UK, Quentin Wilson, said was “a very welcome development”.

“I’m overjoyed to see that finally non-EV drivers will see that there is a charging infrastructure to give them the confidence to switch,” Wilson explained. “Years of not having any charging signage on our roads has helped stoke the myth ‘there’s no infrastructure’.

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Consumer reporter

Tom is Auto Express' Consumer reporter, meaning he spends his time investigating the stories that matter to all motorists - enthusiasts or otherwise. An ex-BBC journalist and Multimedia Journalism graduate, Tom previously wrote for partner sites Carbuyer and DrivingElectric and you may also spot him throwing away his dignity by filming videos for the Auto Express social media channels.

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