New electric car grant is worth up to £3,750 – how does the scheme work?

Motorists buying a new electric car could benefit from a discount of up to £3,750 after the government implemented a new £650 million electric car grant.

The grant targets lower-cost electric vehicles (EVs), applying only to qualifying cars costing £37,000 or less. The scheme can reduce the price of a new EV by between £1,500 to £3,750.

Consumers do not have to apply for the grant individually. Instead, it will be automatically applied when you purchase the car, if the manufacturer has made a successful application to the grant.

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Eligibility for the new grant depends on the carmaker meeting certain sustainability standards, with more sustainable cars being given a higher level of subsidy.

Manufacturers have been able to apply for the grant since 16 July, and the prices of some new cars have already dropped thanks to the grant.

The former Conservative government previously offered EV grants – they were originally worth up to £5,000 when introduced in 2011 but were cut to £1,500 before the scheme came to an end in June 2022.

Funding for the new grant is available until the 2028/29 financial year.

We explore how much you could save on an EV via salary sacrifice in a separate article.

Transport secretary Heidi Alexander said the new 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”.

Edmund King, president of the AA, welcomed the announcement of a new electric car grant in July – he said it is “to be celebrated,” and urged drivers to “to take full advantage of this offer.”

King pointed out that according to the AA’s research, price is a large barrier to EV ownership, saying the AA “have campaigned for incentives to help overcome this issue, and are pleased our calls have been heard”.

In July, the government also announced a new funding package to support charging stations at home for households with an electric vehicle.

The new scheme will provide £25 million for local authorities to expand access to cheaper at-home charging in a bid to lessen the up-front costs of owning an electric car.

It will help connect at-home charging stations to the same supply as household energy using cross-pavement technology, meaning drivers can use cheaper domestic electricity rates, though some will already be benefitting from the best EV energy tariffs.

Will EVs be cheaper under the new electric car grant?

Manufacturers have had since 16 July to apply for the new electric car grant, and many have now received the green light.

On 28 August, there were a total of 28 electric vehicles that are benefitting from the government subsidy, according to the Department for Transport (DfT).

The size of this discount, however, differs between different models. While a large number of new EVs have been given the £1,500 grant, a more limited number have been awarded the full £3,750 grant value.

As the grant is only available for cheaper electric cars which cost £37,000 or less, some of the most popular EVs, like the Tesla Model 3, or China’s BYD Seal will not be eligible for the discount.

Which cars get the full electric vehicle grant?

The first two cars to benefit from the full value of the £3,750 electric car grant were announced by the DfT on 28 August, with both models being produced by Ford.

Drivers will be able to purchase new models of the Ford Puma Gen-E and Ford e-Tourneo Courier at a £3,750 subsidy – the maximum savings available.

The Ford Puma Gen-E is an all-electric SUV which motorists can now buy for £26,245, inclusive of the new saving.

Meanwhile, drivers can also benefit from the full grant when they buy a new Ford e-Tourneo Courier, bringing the price of the multi-purpose vehicle (MPV) to £29,940.

All cars made cheaper by the electric vehicle grant: Full list

The government’s electric car grant is currently split into two bands which determine how much money will be deducted from the price. Cars in Band 1 have £3,750 taken off their price, while those in Band 2 have £1,500 taken off.

A full list of the 28 cars that currently benefit from the government subsidy can be found below.

Band 1 – £3,750 off

• Ford Puma Gen-E
• Ford E-Tourneo Courier

Band 2 - £1,500 off

• Alpine A290
• Citroen e-C3 and Citroen e-C3 Aircross
• Citroen e-C4 and Citroen e-C4 X
• Citroen e-C5 Aircross
• Citroen e-Berlingo
• Cupra Born
• DS DS3
• DS Nº4
• Nissan Ariya
• Nissan Micra
• Peugeot e-208
• Peugeot e-2008
• Peugeot e-308
• Peugeot e-408
• Peugeot e-Rifter
• Renault 4
• Renault 5
• Renault Megane
• Renault Scenic
• Vauxhall Astra Electric
• Vauxhall Combo Life Electric
• Vauxhall Corsa Electric
• Vauxhall Frontera Electric
• Vauxhall Grandland Electric
• Vauxhall Mokka Electric
• Volkswagen ID.3