The Government is introducing a new grant in a move to make new electric cars more affordable. The ‘Electric Car Grant’ (ECG) commits £650m to the new market, offering discounts of up to £3,750 off the cost of a new electric vehicle with an initial list price under £37,000.
Read the full press release from the Department for Transport
In response, BVRLA Chief Executive Toby Poston, said: “Bit, by bit, the Government is chipping away at the barriers to EV adoption. Targeted incentives have powered the transition to date and now the Government is acting to widen the demand base for new electric cars by providing this grant. This generous grant will boost uptake in the retail market but could have serious repercussions for the used market, where rampant depreciation already has red warning lights flashing.
“Further stimulating new EV registrations without supporting the used market risks creating an even greater supply/demand imbalance, putting even more pressure on fast deflating second-hand values. The resulting losses will erode confidence and result in higher finance costs for new EVs, eliminating much of the benefit from the original grant.”
The association’s most recent campaigning to highlight the challenges of the used BEV market included writing to the Secretary of State last week. Read more.
BVRLA members will understandably have a number of questions relating to the Electric Car Grant. Further details of its structure, and which models qualify are expected in due course.
Please see Frequently Asked Questions below. This will be updated further as more details are confirmed. In the meantime, please the team via [email protected] with any comments or questions.
When is the Electric Car Grant available?
Applications for the ECG open on 16 July and close in 2028. This remains under review and the grant will be subject to amendment or closure with no notice when funds are exhausted.
OEMs can first place orders for eligible vehicles via the grant portal from the 11 August 2025. Funding is available on a first come, first served basis. Legitimate orders agreed with customers for vehicles that are assessed and confirmed eligible for the ECG between 16 July 2025 and 11 August 2025 can be honoured.
Members are advised to wait until eligible vehicles have been confirmed by the Government, before communicating to customers to confirm if their vehicle does or doesn't qualify for the ECG.
Which cars will be eligible for the grant?
Eligibility of individual vehicles will be confirmed following an application process. This application process will be handled on a first come, first served basis and opens to OEMs on Wednesday 16 July. Members are advised to wait until eligible vehicles have been confirmed by the Government, before communicating to customers to confirm if their vehicle does or doesn't qualify for the ECG.
Vehicles must meet minimum technical and price criteria to qualify for the ECG. To be eligible for the ECG, a car must be priced at or below £37,000 recommended retail price (RRP).
Eligible vehicles must:
- Be an M1 passenger vehicle (used for the carriage of passengers).
- Produce 0gCO2/km at the tailpipe.
- Have a minimum range of 100 miles WLTP.
- Have a warranty that guarantees the following:
- Vehicle warranty (excluding the battery or fuel cell and electric drive train) for a minimum period of three years or 60,000 miles (96,000 km), whichever comes sooner.
- Battery or fuel cell and electric drive train must be covered by a warranty for a minimum period of eight years or 100,000 miles (160,000 km), whichever comes sooner. In respect of any traction battery, a replacement must be provided if it falls below 70% capacity during the first eight years.
- For battery electric vehicles, the battery must maintain at least 80% of its initial or rated charge capacity for the initial 3 years, and at least 70% of initial rated charge capacity for the initial 8 years or 100,000 miles, whichever comes first.
- For fuel cell vehicles, the fuel stack must maintain at least 90% of its rated voltage output for the initial 5 years.
How is the £37,000 threshold applied?
The RRP definition will be similar to the rules previously used for the PiCG.
The definition of RRP includes:
- VAT, including VAT reclaimable by a business
- vehicle manufacturer or dealer’s mandatory extras including delivery charges or administration fees
- the battery cost (including where the battery is leased)
- any non-standard option fitted by the manufacturer or dealer affecting the capacity of the battery, drive train configuration or maximum net power.
The definition of RRP excludes:
- any non- standard option fitted by the manufacturer or dealer which does not affect the capacity of the battery, drivetrain configuration or maximum net power.
- modifications such as ‘police packs’, ambulance/fire engine modifications.
- modifications for disabled users, including WAV conversions.
- warranty, excluding the mandatory warranty for the battery.
- insurance and service packages etc.
- first registration fee and cost of first licence.
- discounts (including rebates).
Where a vehicle model has multiple powertrain options (that is options that affect the capacity of the battery, drive train configuration, or maximum net power) eligibility will be determined by the RRP price for the lowest priced variant of each distinct powertrain.
What determines how much of the grant each vehicle is eligible for?
Grant amounts are based on environmental criteria, with the greenest vehicles in band one receiving £3,750 and band two vehicles receiving £1,500.
To be eligible for the ECG, manufacturers must hold a verified Science Based Target (SBT) and have embodied carbon scores below a certain threshold.
Vehicles made by manufacturers who have not set an SBT and had it verified by the Science Based Targets Initiative will not be eligible for the scheme.
Grant bands are based on embodied carbon emissions thresholds set in reference to carbon emissions from energy generation for the country in which vehicles and batteries are manufactured.
What is the specific delivery mechanism? Is it the same as the old Plug in Grant?
It will be a similar portal and process to the previous Plug in Car Grant and existing Plug in Vehicle Grants. Manufacturers submit application for vehicle eligibility. Once approved, dealerships can put orders on the portal. OZEV then pays vehicle manufacturers once the vehicles have been delivered to end customers. The vehicle manufacturer then pays dealerships.
How is the current order pipeline impacted with the ECG's introduction?
E.g. if there is an order but no delivery before the grant's introduction, can it become eligible, or is it only orders starting the process pre 16th July that are eligible?
The grant is only for purchases (defined as entering into a binding agreement to buy) of new eligible vehicles made on or after 16 July 2025.
It cannot be applied retrospectively for orders placed before this date.
OZEV will be closely monitoring application rates and auditing orders to identify any suspicious activity.
Are leasing and rental companies able to apply for the grant?
The vehicle manufacturer is responsible for processing the order and applying for the grant. Orders need to state the identity of the ‘end customer’ - not the leasing company contracting the vehicle - clearly showing them receiving the grant. The name of the end customer cannot be changed once the order has been created in the grant portal.
Rental companies themselves are considered as the end user so are directly eligible for the grant.
What is an order?
According to OZEV, the definition of order is when a contract is entered into between a supplier (e.g. the OEM or dealer) and a buyer, or 'party that is purchasing the vehicle' (e.g. a leaseco or rental firm). The order is completed when the buyer takes possession of the vehicle.
Can an order (placed from 16 July onwards) include the Grant before it is confirmed as being eligible by the Government?
A manufacturer is able to offer the grant on a vehicle before it is officially added to the grant portal and confirmed as eligible. This is at the manufacturer's risk.
If the manufacturer is not offering the grant at their risk, orders processed before the vehicle is approved do not qualify for the grant. The grant cannot be retrospectively applied to orders placed before the vehicle in question is confirmed as eligible for the grant.
This remains the case if the vehicle is added to the grant portal between the order being placed and the car being delivered. In that scenario, the order remains ineligible for the grant and it would be considered fraudulent if the order was cancelled and replaced specifically to access the grant.
The Office for Zero Emission Vehicles has suggested the only way for customers to be certain of securing a grant is if the OEM is offering it at risk OR if the vehicle has been added to the grant portal as approved. Members are advised to communicate this clearly to their customers.
What happens if a customer cancels an existing order?
Cancellations should be processed in the usual way. However, the Office for Zero Emission Vehicles (OZEV) has confirmed that it will be monitoring application rates for orders that apply for the Electric Car Grant.
It would be fraudulent for an order placed before 16 July 2025 (or when the grant has been approved for a vehicle) to be cancelled, with the intention of replacing the order to qualify for the grant. All orders via the ECG portal are subject to audit, with a higher percentage of orders to be subject to audit in the initial weeks of the grant being available.
Do salary sacrifice schemes, rental companies, company car providers, and Motability also get access to the grant?
Yes, both private consumers and businesses can benefit from the grant when purchasing a qualifying zero emission vehicle and registering it to a UK address.
Is there a fleet order cap?
No there is not.
What is happening to the existing grants for vans and trucks?
There are no changes or updates to any other ZEV grants offered by the Government at this time.
