Big news! The government has announced that it will offer a grant on sales of new electric cars. Qualifying cars will have to cost £37,000 or less, with the ‘greenest’ electric cars falling into band one and receiving up to £3,750, and others falling into band two for £1,500. There is (as far as we know) no preferential rate for British-built vehicles, as was initially rumoured.
This is a £650 million scheme that will run until 2029, and could be applied to electric cars sold from July 16th, 2025. Which would be impressive given that half of the pertinent details are yet to be confirmed.
Before we get into that, here’s a brief roundup of where we’re at with electric car sales: Right now, in June 2025, sales of battery electric vehicles (BEVs) were up by 39.1% compared with the same month in 2024. Overall, electric cars now account for 1 in 4 new cars sales. But that’s still below the 28% target set by the ZEV mandate. Perhaps more worryingly, that rise is also largely driven by fleet demand; Retail sales of BEVs have fallen 10.8% year-on-year.
So, you can see why the government and the industry have been chewing their nails and generally fretting over how to invigorate retail interest in electric cars. And I think this scheme will certainly do that. I’m incredibly pleased that the British government has done something to show support for the transition to EVs, beyond simply setting targets for manufacturers and infrastructure.
But I have to say that the manner in which the grant has been announced raises more questions than it answers. Why are there so few details of the two ‘bands’ of green cars referenced in the announcement? How is the government defining ‘greenest’? Is it lifetime emissions – to include manufacturing, electricity usage throughout the vehicle’s life, and recycling at the end of it? Or is it just going to include manufacturing emissions? And what fixed parameters will be used to get these figures?
Because in Europe and the UK, there’s no fixed, independent, government-mandated calculation to measure lifetime or manufacturing emissions. That only exists for exhaust emissions and range, and you’ll have seen it referenced as ‘WLTP’ figures. But surely if you’re going to award a grant based on environmental credentials, you need to ensure a level playing field for the figures? At the moment, it’s just up to manufacturers to do their own research, work out their own numbers, and give you that estimate. Should they want to…
Not only that, but how do we know that manufacturers won’t simply raise list prices on their vehicles in the next few months, effectively absorbing some of that government money themselves? Call me a cynic, but I wouldn’t be surprised if that does happen despite the pressure to sell BEVs.
Let’s keep going with the questions: How on earth do we justify a chunky government-funded grant like this on vehicles below £37,000, and then demand a ‘premium’ car tax totalling £2,125 on cars – including BEVs – costing £40,000 and more?
That means that, if you go for an entry-level Kia EV3 Air 81.4kWh you’ll potentially get £3,750 off (or £1,500 depending on which shade of green the government allocates to it). But if you’d been considering the GT-Line S because you want V2L charging and a heat pump, it breaks the £40,000 mark, losing any grant money plus getting hit with an additional £2,125 of expensive car tax supplement between years two and six of its life.
