The government has announced a new electric car grant that’ll slash up to £3,750 off the cost of a new electric car. Obviously, there are some caveats to the scheme but the move should help motivate a faster switch to electrification and allow the UK to get closer to meeting its 2025 climate targets.
The scheme is only open to new electric cars that cost £37,000 or less. It’ll be available to redeem at the point of sale from 16 July 2025 – but it isn’t an indefinite fixture. It’ll exist until the 2028 to 2029 financial year rolls around.
So, if you’re on the fence about buying an EV within the next couple of years, now might be the time to make your mind up. This new scheme replaces the discontinued plug-in car grant, costing the taxpayer £650 million.
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 he 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.’
This new electric car grant builds on the government’s recent announcement to spend a further £63 million on upgrading the nation’s electric car infrastructure. This package of investment will be used to install more electric car chargers at business depots and install cable channels in pavements to allow EV owners without driveways to recharge their cars at home with tripping pedestrians.
Some of that £63 million investment will also be used to move the NHS fleet into electric vehicles at 200 sites. The government says this will save the taxpayer millions – and it plans to reinvest the money saved on maintaining the NHS’s combustion fleet into patient care.
Labour’s throwing a lot of money at improving the UK’s electric car uptake. In total, the government has pledged to spend £6 billion by the end of the decade, which is probably wise if it has any hope of achieving its self-imposed goal of a 28% EV new car sales mix before the end of the year.
We’re more than halfway through the year and the sales mix is still bumbling around the 21% mark. Granted, that’s a huge improvement over the 16.6% EV sales mix the UK achieved in 2024, but there’s plenty of work to do to convince consumers to step away from combustion, especially as hybrid sales have been growing over the last year. By July 2025, hybrid car sales had already outstripped those of 2024 by 0.7%.
Mike Hawes, SMMT chief executive, seems confident the new grant will stoke fresh enthusiasm for EVs: ‘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.
‘Rapid deployment and availability of this grant over the next few years will help provide the momentum that is essential to take the EV market from just one in four today, to four in five by the end of the decade.
‘This announcement is a welcome response to consistent calls from the industry for more support, which will be in addition to the substantive subsidies already provided by manufacturers. Taken with recent announcements regarding infrastructure investments and the Industrial Strategy, the UK has the opportunity to maintain its position as a leader in both the manufacture and sale of zero emission vehicles.’
Parkers has contacted the Department for Transport to find out more information about the how the new electric car grant works and what it’ll mean for you as a consumer. As soon we have more information, we’ll update this page.
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