You could save up to £3,750 on an EV thanks to the government’s new electric car grant

The government’s new £650m electric car grant aims at making EVs more affordable, offering discounts of up to £3,750 on brand new electric vehicles. This forms part of the UK’s Plan for Change, designed to help households save money while accelerating the switch to greener, zero-emission cars.

Car buyers can claim the discount directly at dealerships on electric cars priced under £37,000 – no separate application needed. Now that the grant has been approved, manufacturers can start applying for funding, meaning discounted EVs should start showing up in showrooms within weeks, according to the RAC.

There are two levels of support: the greenest models qualify for the full £3,750 discount, while cars that don’t quite meet the highest eco-standards still get £1,500 off.

Only cars from brands committed to a Science-Based Target (SBT) for cutting emissions – and that have demonstrated real progress – will qualify. Nearly 50 new electric car models are expected to meet these sustainability criteria, with more likely to be confirmed soon.

It is understood that Chinese brands – which produce some of the cheapest electric cars on the market – will be classified separately based on their environmental credentials and will qualify for the ‘second level grant’ of £1,500.

The Electric Car Grant (ECG) will run until the 2028/29 financial year, potentially helping thousands of drivers get behind the wheel of cheaper electric cars.

Remember, you can buy a brand new or used car right here on Carwow. And you can sell your car, too. We’re here to help you through every step of your car-changing journey.

What does this mean for you?

Many drivers say the upfront cost of electric vehicles is a major barrier. This grant is designed to close that gap, making EVs more affordable from the get-go.

On top of the discount, electric cars can save you up to £1,500 a year on fuel and running costs compared to petrol vehicles. Combined with lower taxes and ongoing savings, switching to an EV is becoming an increasingly smart choice for families looking to save money.

The market is also getting more affordable, with two in five used electric cars sold for under £20,000 and 34 brand new models priced below £30,000.

With £650m allocated, the grant could subsidise around 173,000 electric cars at the full £3,750 discount – roughly half the number of EVs purchased in the UK last year.

Here’s a list of all the electric car models that could qualify for the grant if they meet the sustainability credentials:

What else is the government doing?

Along with the electric car grant, the government is investing £25m to help local councils install “cross-pavement” charging solutions. These involve digging a small trench in the pavement with a flap that lets a charging cable safely cross the road without causing a trip hazard.

This setup will make it easier for people without driveways to charge their EVs at home with cheaper electricity, potentially saving some drivers up to £1,500 a year compared to petrol or diesel.

On top of that, another £30m is going towards helping businesses switch their fleets to electric, and £8m will bring chargers to over 200 NHS sites across the country.

Charging is also booming, with over 82,000 public points across the country – and a new one popping up every 30 minutes. So whether you’re at home, work, or on a longer trip, charging your car is getting easier.

The scheme also comes alongside the Zero Emission Vehicle mandate, which requires car manufacturers to sell more zero-emission vehicles every year. Updates to these rules are helping car companies feel confident about making more electric cars.

And for every driver, the government is putting a record £1.6bn into fixing potholes and freezing fuel duty at 5p until spring 2026 – which should save most drivers around £50-60 a year.

The industry has its say

The car industry’s pretty excited about this, with many saying now’s a better time than ever to switch to electric.

Mike Hawes from SMMT said the grant could help boost electric car sales from one in four today to four in five by 2030. “With other investments on the way, the UK is set to stay a world leader in making and selling zero-emission cars.”

Simon Williams from the RAC says we’ll likely see discounted electric cars popping up at dealerships across the country soon. “The biggest deals will be on the greenest models, so you’ll save money and help the planet at the same time.”

Dan Caesar, CEO of Electric Vehicles UK, added, “This grant is a great little push for anyone thinking about switching to electric. A lot of people overestimate the cost of EVs, and this helps clear that up. Most folks who go electric don’t look back.”

And Edmund King, AA President, pointed out that price is a big reason why some drivers hold off on going electric. “This should help loads of people make the switch. Plus, with new charging hubs and options for people without driveways, this is a real boost for the electric car revolution.”

In fact, this new scheme matches one of Carwow’s top 10 asks for the government in our ‘Future of Motoring Manifesto.’ We’re also calling for grants to help with home EV charger installation and for making insurance more affordable.

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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