As of 16 July 2025, a new £650 million electric car grant has been made available by the government to offer discounts of up to £3,750 on new fully-electric cars worth £37,000 or less.
The previous government electric vehicle grants ended in 2022; however, the Department for Transport (DfT) announced the new grant to support the transition to EVs and incentivise sustainable automotive manufacturing.
Continue reading to find out everything you need to know about the new Electric Car Grant.
What is the new electric car grant?
The Transport Secretary has announced a new £650 million Electric Car Grant (ECG) to “make it easier and cheaper to own an electric vehicle”. Drivers can now access grants of up to £3,750 on cars priced £37,000 or less.
How can manufacturers become eligible?
Eligibility is dependent on the highest manufacturing sustainability standards. The grant amount will be based on a sustainability criteria where manufacturers have a verified science-based emission target. This target is a company’s commitment to reduce its environmental impact, in line with the UK’s international climate commitments. The manufacturer needs to be able to prove that the CO2 emitted in production for the car is in line with the sustainability criteria.
Manufacturers will be placed in a band based on their sustainability criteria.
Band 1: The most sustainably manufactured cars will be eligible for up to £3,750.
Band 2: Cars that meet some environmental criteria will be eligible for up to £1,500.
Cars that don’t meet the minimum sustainability criteria will not be eligible for the grant.
The electric car grant will be available until the 2028/29 financial year.
Who is the new electric car grant available for?
The grant is available for anyone buying or leasing a brand-new fully-electric car priced at £37,000 or less. The car must meet the government’s sustainability criteria. The eligible models will have to appear on the official government list, which is expected to be released in July.
How does the grant impact consumers?
This is a hassle-free grant for consumers. All paperwork and administration will be handled by manufacturers, dealers and the government.
How does the grant impact personal leasing customers?
The new electric car grant is available for private and business leasing customers and is eligible to reduce the cost of both the deposit and the monthly rentals.
When will we see a list of eligible vehicles?
Whilst the grant is available from 16th July 2025, manufacturers still need to apply and submit evidence. The government will provide an update on eligible vehicles in the coming weeks. It is expected that around 50 models will be eligible. However, manufacturers like Tesla, BMW, Audi, and Mercedes are unlikely to be on the list due to the £37,000 grant limit. To learn more about how the grant will affect corporate fleets, visit CLM Fleet Management.