UK government announces Electric Car Grant

The UK government has announced that the cost of some new electric cars will soon be reduced by up to £3,750. This is due to banded grants aimed at encouraging drivers to move towards zero-emission vehicles ahead of the now delayed ban on the sale of new petrol and diesel cars from 2035.

The Department for Transport said the £650 million fund will only apply to vehicles with a list price of £37,000 or below, with only the greenest models eligible for the highest grant. ‘Band two’ vehicles will offer a discount of up to £1,500.

Car makers could apply for funding from Wednesday 16 July, 2025 with the RAC claiming that the discounted cars will start appearing at dealerships within weeks. The BBC report on the grant mentions that some drivers have concerns regarding the amount of public charging points. This backs up Tempcover research that found 83% of EV drivers have struggled with public charging issues.

To make EV exploration more accessible, we'll help you save if you're planning to try one out. We’re offering a 50% discount on the Tempcover fee for 1 day policies so you can borrow or test drive an EV for a whole day - fully insured without having to adjust existing cover.

Available until 31st August, the initiative supports the government’s cleaner transport goals, while also addressing the hesitation many motorists feel about switching to an EV without a prior test drive. The discount will be automatically applied during the booking process.

To test drive an EV with a discounted temporary car insurance policy for one day* with Tempcover, click here.

How does the government electric car scheme work?

The Electric Car Grant will be available to UK drivers who are purchasing or leasing qualifying electric vehicles through approved dealers. Drivers who are eligible include:

• Private buyers
• Personal lease customers
• Salary sacrifice participants
• Business lease customers for vehicles under £37,000

The grant applies per vehicle, not per customer. Only new vehicles qualify for grant support.

The discount will be applied at the point of sale by manufacturers and dealers, and can only be claimed for new cars at the point of first registration. This means there will be no need for customers to fill out any paperwork.

To be eligible for the grants, cars must be priced £37,000 or below and meet the following minimum technical standards:

• Be an M1 passenger vehicle (used for the carriage of passengers)
• Produce 0g CO2/km at the tailpipe
• Have a minimum battery range of 100 miles WLTP
• Have a battery or fuel cell, used to drive the vehicle’s propulsion system, with an acceptably low rate of degradation
• Have a warranty that guarantees the following:

1. In respect of any traction battery, hydrogen fuel cell stack or hydrogen tank and electric drivetrain, a warranty period of at least 8 years, or a distance of at least the first 100,000 miles, whichever is reached first
2. In respect of any traction battery, providing for replacement of the battery if it falls below 70% capacity during the first 8 years
3. In respect of any fuel cell, the fuel stack must maintain at least 90% of its rated voltage output for the initial 5 years
4. In respect of the remainder of the vehicle, covering a warranty period of at least 3 years, or a distance of at least the first 60,000 miles, whichever is reached first

Visit gov.uk for more information on vehicle eligibility criteria.

There is a separate Wheelchair Accessible Vehicle (WAV) grant available for cars which are converted to WAVs and have a recommended retail price below £50,000.

How do I claim the Electric Car Grant?

The Electric Car Grant applies to new cars at first registration. If you’re in the market for an electric car and are buying an eligible vehicle, you’ll receive an automatic discount at the dealership.

Which cars qualify for the Grant?

The grant operates on a two-tier system, based on environmental sustainability criteria. Band One vehicles - the greenest options - receive the full £3,750 grant, while Band Two vehicles qualify for £1,500.

Some companies may offer eclectic car salary sacrifice savings which could help EV drivers save even more money if they want to buy a new electric vehicle.

The Electric Car Scheme has a full list of EVs that will be eligible for the Electric Car Grant:

Under £20,000

• Dacia Spring - £14,995
• Leapmotor T03 - £15,995
• BYD Dolphin Surf - £18,650

£20,000 - £25,000

• Fiat Grande Panda- £20,975
• Citroën ë-C3 - £21,990
• Renault 5 - £22,995
• Citroën ë-C3 Aircross - £23,095
• Hyundai Inster - £23,495
• Vauxhall Frontera Electric - £23,995
• Renault 4 - £24,000
• Fiat 500e - £24,995

£25,000 - £30,000

• BYD Dolphin - £26,195
• Vauxhall Corsa Electric - £26,895
• MG4 EV - £26,995
• Citroën ë-C4 - £27,650
• MG5 EV - £28,495
• Citroën ë-C4 X - £28,715
• Smart #1 - £29,960
• Ford Puma Gen-E - £29,995
• Suzuki e VITARA - £29,999
• H3: £30,000 - £35,000
• Mini Cooper Electric - £30,000
• MG ZS EV - £30,495
• Volkswagen ID.3 - £30,850
• Citroën e-Berlingo - £30,990
• Fiat 500e Cabrio - £30,995
• Skoda Elroq - £31,510
• Mini Aceman - £31,800
• Toyota Proace City Verso Electric - £31,849
• GWM ORA 03 - £31,995
• Vauxhall Combo Life Electric - £32,180
• Peugeot e-Rifter - £32,230
• Peugeot e-2008 - £32,300
• Peugeot e-208 - £32,400
• Renault Megane E-Tech - £32,495
• Fiat 600e - £32,995
• Kia EV3 - £32,995
• Omoda E5 - £33,055
• Volvo EX30 - £33,060
• Vauxhall Mokka Electric - £33,245
• Alpine A290 - £33,500
• Ford e-Tourneo Courier - £33,690
• Alfa Romeo Junior Elettrica - £33,895
• Smart #3 - £33,960
• Abarth 500e - £34,195
• Kia EV4 Hatchback - £34,695
• Jeep Avenger Electric - £34,800
• Vauxhall Astra Electric - £34,995
• Hyundai Kona Electric - £34,995

£35,000 - £37,000

• CUPRA Born - £35,495
• Kia EV4 Fastback - £36,000
• Vauxhall Astra Sports Tourer Electric - £36,155
• MG4 EV XPOWER - £36,495
• Leapmotor C10 - £36,500
• KGM Torres EVX - £36,995

Do you have to pay for EV charging stations?

Once you’ve bought an electric car, there are various places you’ll be able to charge it. These include:

• At home - You may be eligible for a grant to help with chargepoint installation. If you charge during off-peak times, this can typically be the cheapest option.
• In public places (e.g. supermarket car parks) - You’ll normally have to pay for a public charging point, but costs do vary and there are growing initiatives aiming to simplify these payments.
• At workplaces - The Workplace Charging Scheme is a government grant that provides support towards the purchase, installation and infrastructure of electric vehicle chargepoints at eligible places of work. Applications close on 31 March, 2026.

Do electric cars pay road tax?

Yes, from 1 April, 2025, registered keepers of electric, zero or low emission cars, vans and motorcycles have had to pay vehicle excise duty (road tax). EVs were previously exempt but the majority will now have to pay the standard annual tax rate of £195. The only exceptions are EVs registered between 1 March, 2021 and 31 March, 2017, which will pay £20 tax a year.

Is it worth buying an electric car?

This will depend on personal preference and circumstances. Any vehicle purchase is a significant investment so make sure you do your research before purchasing an electric vehicle. EVs offer a number of environmental benefits and potentially lower running and maintenance costs.

If you’re looking into buying an EV, why not look into borrowing a friend’s and taking it out for a drive? With temporary car insurance, you can get a feel for the difference in a greener, smoother ride and prepare.

Sources

https://www.bbc.co.uk/news/articles/cn5kpkypxp6o

https://www.gov.uk/government/speeches/electric-car-grant-launched

https://www.gov.uk/government/news/new-63-million-boost-for-britains-electric-vehicle-revolution

https://www.gov.uk/government/publications/how-to-apply-for-vehicle-eligibility-for-the-electric-car-grant/how-to-apply-for-vehicle-eligibility-for-the-electric-car-grant

https://www.carwow.co.uk/news/9217/electric-car-grant#gref

https://www.autoexpress.co.uk/news/ev-grant

https://news.sky.com/story/new-electric-car-grants-of-up-to-3-750-aims-to-drive-sales-13396800

*T&Cs

Get 50% off the Tempcover Fee portion of your policy price when you buy temporary car insurance policies for 1 day in duration. The discount is not available for learner driver, van, impounded vehicle, motorcycle, and ex-pat policies. The discount is taken from the Tempcover Fee portion of your policy price and is not, therefore, subject to IPT. Access to the discount is available from 16th July 2025 until 31st August 2025 and is only available and automatically applied when you purchase via the link here and purchase your policy on the Tempcover website. The discount is subject to full insurance checks.