UK Government Grants Automotive Sector Financial Aid for Electric Vehicles, Wins Approval From the RAC
The UK Government has introduced a new Electric Car Grant (ECG) to encourage electric vehicle (EV) uptake, offering significant discounts on qualifying new EVs priced under £37,000. The grant, which was launched on 16 July 2025, aims to make EVs more affordable and support the transition to zero-emission transportation [1][2].
The ECG has a two-tier structure based on environmental sustainability criteria. The greenest cars qualify for the full £3,750 discount (Band One), while others still meeting standards receive £1,500 off [1][3]. The scheme has £650 million in funding through the 2028-2029 financial year, primarily aimed at supporting new zero-emission cars and backing manufacturers committed to high sustainability standards [2][3].
Eligibility covers private buyers, personal lease customers, salary sacrifice schemes through approved workplace programs, and business leases. However, the vehicle must be new and meet sustainability requirements [1]. Nearly 50 electric car models from brands that demonstrate real progress on emissions reduction are expected to qualify, including some Citroen models like the e-C3, e-C4, e-C5, and e-Berlingo [3][4].
The grant is applied at point of sale through approved dealers and is per vehicle rather than per customer, allowing eligible buyers to benefit multiple times when purchasing different vehicles over time [1][4]. Brands offering their own discounts matching the grant have also appeared, including some Chinese manufacturers and brands like Alfa Romeo, Hyundai, and Volkswagen [3].
The ECG is a shot-in-the-arm for EV adoption, coming three years after the end of the plug-in car grant. It is further welcome news following the announcement about pavement gully charging solutions, which will enable those without driveways to charge an electric vehicle at home [5]. These initiatives are expected to result in more drivers benefiting from the lower costs of running an electric car.
Moreover, the ECG aims to provide benefits not only for drivers' wallets but also for the planet. The cost to charge an electric car at a rapidly accessible charger has increased by 42%, reaching an average of 63.29p per kilowatt hour [6]. The faster roadside chargers rolled out by the RAC are expected to be beneficial for insurers and claims handlers, as they can help patrols get drivers moving more quickly [7].
In summary, the ECG encourages uptake of sustainable electric cars by making them more affordable through substantial discounts based on vehicle environmental credentials, backed by a £650 million fund running until 2028-29. The grant supports a range of buyers and manufacturers committed to emissions reductions, and it is expected to start appearing at dealerships within weeks [1][2][3][4].
References:
[1] BBC News. (2025, July 16). New electric car grant to help drivers go green. https://www.bbc.co.uk/news/business-58068918
[2] GOV.UK. (2025, July 16). New Electric Car Grant. https://www.gov.uk/government/news/new-electric-car-grant
[3] What Car? (2025, July 16). New electric car grant: Everything you need to know. https://www.whatcar.com/news/new-electric-car-grant-everything-you-need-to-know/162944
[4] Auto Express. (2025, July 16). New electric car grant: How much can I save? https://www.autoexpress.co.uk/electric-cars/news/227453/new-electric-car-grant-how-much-can-i-save
[5] GOV.UK. (2025, June 25). Pavement gully charging solutions. https://www.gov.uk/government/news/pavement-gully-charging-solutions
[6] RAC. (2025, July 1). Rapid charging costs rise by 42%. https://www.rac.co.uk/drive/news/rapid-charging-costs-rise-by-42-p-per-kilowatt-hour/
[7] RAC. (2025, June 23). RAC begins rolling out faster roadside chargers for electric cars. https://www.rac.co.uk/drive/news/rac-begins-rolling-out-faster-roadside-chargers-for-electric-cars/
- The Electric Car Grant (ECG) offers motor insurance customers savings, as it provides discounts on qualifying new electric vehicles, making car-maintenance costs more manageable for drivers adopting electric vehicles.
- Technology advancements in electric vehicles (EVs) and car-maintenance services align with today's lifestyle preferences, as the ECG encourages electric vehicle uptake, providing benefits for both drivers' wallets and the environment.
- As the transition to electric vehicles continues, thoughts about the impact on events industry like car shows will be influenced by growing selections of eligible electric vehicle models, including those from brands like Citroen, Alfa Romeo, Hyundai, and Volkswagen.
