Electric car grants are back! Cheapest, greenest EVs to be discounted by £3,750

The weekend rumours were true: the government has announced a new Electric Car Grant, which will see up to £3,750 knocked off the price of a new EV costing less than £37,000.

But rather than a blanket discount, cars that qualify will be split into two bands: those with the lowest CO2 manufacturing footprint will get the full amount, but above a certain threshold the subsidy will be lowered to £1,500.

The Department for Transport hasn’t, er, actually said what those thresholds are. Anyway.

The ECG (not to be confused with an electrocardiogram) will be in place until the 2028/29 financial year, although if demand is strong enough the £650m pot could run dry before then.

Unlike the previous Plug-In Car Grant – which was killed off in 2022 – it's car manufacturers and not customers who will be in charge of applying for the new grant.

Carmakers can apply from tomorrow (July 16), so you could start seeing lower prices within weeks. Or possibly even earlier than that if a manufacturer is really confident that its paperwork will be rubber stamped.

“This EV 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,” said Transport Secretary Heidi Alexander.

“And with over 82,000 public chargepoints now available across the UK, we’ve built the infrastructure families need to make the switch with confidence.”

A cynic might suggest that if that last bit were true, the government wouldn’t have announced more funding for home charging solutions just two days ago.

Anyway, news of the Electric Car Grant has been pretty universally welcomed within the industry. Mikes Hawes, chief executive of the SMMT said the move is “a clear signal to consumers that now is the time to switch”, while Vicky Read, CEO of ChargeUK has called it “brilliant news for drivers and for the UK’s transition to electric vehicles”.

And Adam Wood, MD at Renault UK, said: “These incentives are extremely welcome, and a much-needed signal that government is ready to put tangible action behind the ambitious plans for the transition to electric vehicles (EVs) that it has outlined.”

Will the money off tempt you to go electric, or are you staunchly sticking to ICE until the arctic has vanished?