Does the government’s electric car grant make car leasing cheaper?

The government’s electric car grant could save you up to £3,750. But how does it impact leasing a car?

The UK government’s new £650m electric car grant is a welcome move to bring down the cost of new EVs, offering savings of up to £3,750 for electric cars priced under £37,000. But while headlines have focused on car buyers, what does this mean for the leasing market?

We spoke to Rob Buckland, leasing director at Carwow Leasey, to unpack how this grant is shaping electric car leasing – and why passing those savings down to consumers is absolutely essential.

A familiar challenge for leasing brokers

Carwow Leasey is Carwow’s dedicated leasing broker, helping drivers find great Personal Contract Hire (PCH) deals by connecting them with top leasing providers. They also offer Business Contract Hire (BCH) and Salary Sacrifice schemes. The team has welcomed the government’s new EV grant as a big step toward making electric cars more affordable for more people.

“This isn’t the first time we’ve worked with EV grants,” says Buckland, who has spent the last four years in the electric car industry and ran an EV-only brokerage. “Back then, the grant values gradually declined, which made it harder to shift electric cars.”

With the return of more substantial support, leasing brokers such as Carwow Leasey are in a strong position to offer better value to customers – but it all depends on what funders, such as finance and leasing companies, choose to do.

“Some take a conservative approach and adjust their residual value positions to protect their risk. Others will pass the savings on to customers entirely,” Buckland explains. “Either way, we expect to see leasing savings on EVs under £37,000, which is great news.”

Roughly 50 electric car models currently meet the criteria, and several eligible models have already been announced. This presents a meaningful opportunity to lower leasing costs and expand EV access for more drivers.

Does the government electric car grant apply to leases?

Yes, the grant also applies to leases. Once manufacturers are approved for the grant, the on-the-road (OTR) prices of qualifying electric cars will drop. Those adjusted figures feed into the funders’ rate books, which in turn determine the monthly lease payments offered to consumers across various terms.

“Some funders have already adjusted their rate books, others are still catching up,” Buckland explains. “But that’s just the nature of the industry – it will filter through.”

Will drivers see the savings?

Buckland says customers can expect transparency. “We’ll make it clear in our terms and conditions if a particular electric car qualifies for the grant, and those savings will be reflected in the lease price.”

However, he notes that not all funders may pass on the full £3,750. “Many will pass on a significant portion. Carwow Leasey’s goal is to make EVs more accessible – and if we can encourage funders to pass on the full grant, it’s a win-win for everyone.”

In reality, though, the flow of savings to drivers will vary. In the leasing market – much like the broader EV sector – price changes don’t always filter through instantly. Even after manufacturers confirm their pricing adjustments, funders still need time to implement the changes and weigh any extra risk from the car’s future value.

That said, there are encouraging signs. Some manufacturers and dealers are acting faster, absorbing the admin lag and pushing discounts straight to customers. Leapmotor, for example, has offered its own price cuts, generating a surge in enquiries and strong conversions.

And sometimes, speed comes from sidestepping the traditional finance channels altogether. For example, when Renault announced a £1,500 discount on its 5 E-Tech, it made it immediately available through dealer funding – bypassing the slower-moving big lenders. The result? Those savings fed straight into competitive lease quotes almost overnight – and some are already live on Carwow Leasey, with deals from as little as £186 per month.

Chinese EV brands and the grant

Buckland expresses concerns over reports that Chinese EV brands may only qualify for the lower-tier grant of £1,500. “An EV is still an EV, no matter where it’s made,” he says. “Many of these brands, such as BYD, offer excellent, affordable cars that help accelerate EV adoption.”

He argues that restricting their eligibility sends the wrong message. “These products are making electric car ownership more accessible. The grant should support that – not penalise it.”

A push for greater access

For Buckland and the team at Carwow Leasey, the grant’s biggest potential is in opening up electric driving to more people, especially if savings are fully passed on through leasing deals.

“We’d love to see funders pass the savings straight through to consumers. Holding them back just slows down adoption,” he says. “Funders already have challenges with higher on the road (OTR) electric cars coming back off lease. One solution is to give these cars a second life through used EV leasing rather than auctioning them off.”

Don’t let the grant stop at the showroom

The government electric car grant is a solid step in the right direction, but its real impact depends on what happens next. Manufacturers are lining up to qualify, and brokers are ready to pass on the savings.

“Holding the savings back benefits no one,” says Buckland. “Passing them on makes electric cars more affordable, accelerates adoption, and helps the UK move faster towards its climate goals.”

Now it’s over to the funders and government to make sure those savings actually reach drivers, says Buckland – right where it matters most: the monthly lease payment.

Car change? Carwow!

Looking for a new set of wheels? With Carwow you can sell your car quickly and for a fair price – as well as find great offers on your next one. Whether you’re looking to buy a car brand new, are after something used or you want to explore car leasing options, Carwow is your one stop shop for new car deals.

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