UK Launches $845 Million EV Grant Scheme to Boost Electric Car Sales

Up to 3,750 pounds ($4,880) will be available per vehicle, as UK ministers back the electric car market.

A customer prepares to charge his Tesla electric vehicle (EV) in a bay for electric vehicles at a supermarket in north London on Nov. 18, 2020. Daniel Leal-Olivas /AFP via Getty Images

The UK on Tuesday announced a 650 million pound ($845 million) grant scheme to provide discounts for drivers buying new electric vehicles (EVs), as part of its efforts to accelerate the transition away from petrol and diesel cars.

Under the scheme, drivers switching to electric cars priced at 37,000 pounds ($48,100) or less will be eligible for government grants of up to 3,750 pounds ($4,880).

Applications will open on Wednesday, once manufacturers register their vehicles for the Electric Car Grant (ECG).

The Labour government, which has pledged to ban the sale of new petrol and diesel cars and vans from 2030, said the scheme is designed to support manufacturers, encourage consumers, and drive economic growth.

“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,” said UK Transport Secretary Heidi Alexander.

The government said electric cars are becoming more affordable, with two in five used EVs now selling for under 20,000 pounds ($26,000), and 33 new models available for less than 30,000 pounds ($39,000).

The new investment comes after the previous Conservative government ended universal EV grants in June 2022.

Taxpayer Costs and Infrastructure Gaps

Conservative shadow transport secretary Gareth Bacon criticised the scheme, warning it would place additional burdens on taxpayers.

“Last year, only one in 10 private purchases of new cars was electric. This is a product people demonstrably do not want,” he said. “Last week, the Office for Budget Responsibility made clear the transition to EVs comes at a cost, and this scheme only adds to it. Make no mistake: more tax rises are coming in the autumn.”

The Conservative Environment Network also voiced concern, urging the government to prioritise investment in EV charging infrastructure over subsidies.

According to the UK’s public spending watchdog, the National Audit Office, overall charge point installations are on track, but more needs to be done to ensure “adequate coverage” across the country.

Industry Reaction

The Society of Motor Manufacturers and Traders (SMMT) welcomed the grant, with chief executive Mike Hawes calling it “a clear signal to consumers that now is the time to switch.”

According to SMMT figures, electric and plug-in hybrid vehicles in 2025 made up a larger share of the UK car market than last year. Battery EVs are among the fastest-growing segments, while hybrid sales have also risen steadily. Low-emission vehicles are outpacing growth in the broader car market.

The UK’s Zero Emission Vehicle (ZEV) mandate sets minimum targets for the share of car manufacturers’ sales that must be zero-emission vehicles. The requirement will rise from 22 percent in 2024 to 80 percent by 2030, reaching 100 percent in 2035.

Last year, the market still fell short of the target, with just one in 10 private consumers switching to an EV. The SMMT reported that petrol was by far the “dominant powertrain” for those buyers.

In April 2025, following a consultation, the government announced plans to ease some of the mandate’s rules.

Simon Williams, head of policy at the Royal Automobile Club, said discounted EVs should begin appearing at dealerships “within weeks.”

“And, as the biggest savings will go to cars with the strongest ‘green’ manufacturing credentials, drivers will be picking models that are not only better for their wallets, but better for the planet too,” he said.

However, the Alliance of British Drivers (ABD) criticised the scheme, arguing that subsidies should not favor wealthier consumers.

“If public money is to be used to assist drivers, it should not be channelled towards the relatively wealthy who can afford new cars,” said ABD policy director Brian Gregory. “Instead, we would support help for those struggling to keep their older cars on the road, which is often the most sustainable option.”

The UK’s move comes as the United States prepares to end its $7,500 federal EV tax credit this autumn, following the passage of budget legislation in Congress.

The subsidies, introduced under the 2022 Inflation Reduction Act, helped boost EV sales in recent years, though critics say the benefits have increasingly gone to vehicles using Chinese-sourced materials.