It’s back! Government launches new EV grant!

• New Electric Car Grant (ECG) announced
• Up to £3,750 off the cost of new EV (more eco friendly models qualify for the higher band)
•  Automatically applied by the manufacturer or dealer for lease customers - no application needed from lessees
• More than double the discount of old £1,500 Plug in Car Grant, which disappeared June 2022.

A new Electric Car Grant (ECG) will see discounts of up to £3,750 zero emission passenger vehicles priced at £37,000 or less. the Department for Transport has announced.

For lease customers, the discount is automatically applied at point of lease - there’s no separate application by the customer. The grant is applied through the manufacturer or dealership via the official grant portal. 

The new ECG is a massive improvement on the last grant that was available to consumers to help them get behind the wheel of an electric vehicle.

The old Plug in Car Grant (PiCG) - which was discontinued back in June 2022 - offered up to £1,500 off the price of a new electrified car.

This new Electric Car Grant more than doubles the cash available - and also comes as the Govt pledges a further £63m to fund EV charging points.

Shane Pither, Head of Select Electric at Select Car Leasing, said: “This is a landmark moment for the UK’s electric vehicle transition - and we’re excited to support drivers, local authorities, fleets, and communities in maximising these new opportunities.

“This announcement isn’t just about the Electric Car Grant, it’s about making EV ownership more accessible all-round, with a £63m package directed at expanding charging infrastructure across the UK.

“That includes £25 million to help councils roll out cross-pavement charging solutions for homes without driveways, enabling cost-effective charging at rates as low as 2 pence per mile and annual savings of up to £1,500.”

Here’s everything you need to know: 

What electric cars are eligible for the Electric Car Grant (ECG)?

Eligible vehicles must be brand new, battery electric (no tailpipe emissions), have WLTP range of at least 100 miles, and price at or below £37,000.

Manufacturers must also meet sustainability criteria based on Science Based Targets and carbon emissions from battery and vehicle production.

About one third of models currently on sale under £37,000 may qualify - full eligibility lists are expected to be published in early August 2025, with official confirmation around 11 August. 

What does that mean for lease customers, and do lease customers need to physically apply for the Electric Car Grant?

The answer is no - the grant will be applied automatically for eligible lease customers.

The discount will be recouped by the manufacturer instead, with the lower vehicle cost reflected in your lease deal.

When does the Electric Car Grant (ECG) start?

The ECG begins almost immediately, with the scheme open from 16 July 2025.

The news gets even better, as funding for the scheme is available until the 2028/2029 financial year.

Are plug-in hybrids included in the Electric Car Grant (ECG)?

No. The ECG applies solely to zero emission electric vehicles. Plug in hybrids (PHEVs) are not eligible, as they emit CO₂ at the tailpipe

And what about vans? They already automatically qualify for a separate grant - you can read about that here.

Which cars will qualify for the maximum £3,750 discount under the Electric Car Grant (ECG) scheme?

The Electric Car Grant (ECG) scheme runs a two-tiered system.

• Band 1 vehicles (the most sustainable in manufacturing) are eligible for the full £3,750 grant

• Band 2 vehicles (still meeting minimum standards) may be eligible for up to £1,500 off

Manufacturers must hold verified Science Based Targets and provide full sustainability data. There’s currently some confusion in the industry - not all vehicle models have confirmed status, and some Chinese assembled vehicles or those built in high carbon intensity regions may be excluded from Band 1 or even from eligibility entirely

How are the ECG bands arrived at?

It’s a complicated system that is structured around the car’s ‘eco rating’ - which depends on things like the C02 emissions created during the vehicle’s production.

The bands themselves are determined by a manufacturer's so-called 'Science-Based Target', or 'SBT. That's an industry-wide scheme that encourages manufacturers to keep their carbon output low when producing vehicles. 

The overall SBT score (which will determine whether a cheap EV qualifies for the max £3,750 grant or the lower £1,500 grant) is weighted 70 per cent for the CO2 produced during battery manufacturing and 30 per cent towards vehicle assembly emissions. 

A manufacturer will need to submit an application for each of its EVs to determine where they fall in the Government's grant pecking order.

But it all aims to reward the greenest vehicles currently available.

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