Currently reading: Government cuts electric car grant from £3000 to £2500
Electric cars costing more than £35,000 will now no longer be eligible for the incentive

The government has downsized the financial incentive package offered to EV owners in the UK, reducing the 'plug-in car grant' from £3000 to £2500 and lowering the upper price limit for eligible vehicles. 

Buyers of electric cars costing more than £35,000 will now no longer qualify for an incentive, which was previously available on vehicles costing up to £50,000. The changes come into effect immediately from today (18 March). 

The move has been made, according to the government, to "reflect a greater range of affordable vehicles available", and to help funding go further as more drivers make the switch to electric cars.

The government said: "This will mean the funding will last longer and be available to more drivers. Grants will no longer be available for higher-priced vehicles, typically bought by drivers who can afford to switch without a subsidy from taxpayers."

Since 2019, the government claims, the number of sub-£35,000 pure-electric cars on the market has increased by "almost 50%". It estimates that more than half the models currently on the market will remain eligible for the £2500 support package, highlighting "spacious family cars" including the MG ZS EV and Hyundai Kona Electric - although the Kona Electric is now eligible exclusively in entry-level 39kWh form. 

MG itself has pledged to continue offering the full £3000 dicsount on all EVs ordered before the end of the month, as a gesture of goodwill to any prospective customers who had decided to buy an MG with the previous grant amount in mind.

1 Mg zs ev 2019 rt hero front

Until this time last year, all electric cars were eligible for a £3500 government grant. It was reduced by £500 and restricted to sub-£50,000 cars as part of the 2020 budget, at which point funding was said to have been secured to run the scheme until 2022-2023.

The latest reduction has been made in an effort to preserve that timeline and the government has said it will continue to review the scheme in line with "further price reductions in electric vehicles", suggesting another reduction is on the cards, likely in March 2022. 

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Transport minister Rachel Maclean said: "We want as many people as possible to be able to make the switch to electric vehicles as we look to reduce our carbon emissions, strive towards our net-zero ambitions and level up right across the UK.

"The increasing choice of new vehicles, growing demand from customers and rapidly rising number of chargepoints mean that, while the level of funding remains as high as ever, given soaring demand, we are refocusing our vehicle grants on the more affordable zero-emission vehicles – where most consumers will be looking and where taxpayers’ money will make more of a difference."

The government said it has provided £1.3 billion in grants to buyers of around 285,000 plug-in vehicles since 2011. Originally, the scheme included plug-in hybrid vehicles but was restricted to pure-electric models in 2018 in line with an uptick in electric car availability and popularity. 

Today's unexpected announcement was met by criticism from SMMT chief executive Mike Hawes, who condemned the change as "the wrong move at the wrong time".

Hawes said: “New battery-electric technology is more expensive than conventional engines and incentives are essential in making these vehicles affordable to the customer. Cutting the grant and eligibility moves the UK even further behind other markets, markets which are increasing their support, making it yet more difficult for the UK to get sufficient supply.

"This sends the wrong message to the consumer, especially private customers, and to an industry challenged to meet the government’s ambition to be a world leader in the transition to zero-emission mobility.”


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Felix Page

Felix Page
Title: News and features editor

Felix is Autocar's news editor, responsible for leading the brand's agenda-shaping coverage across all facets of the global automotive industry - both in print and online.

He has interviewed the most powerful and widely respected people in motoring, covered the reveals and launches of today's most important cars, and broken some of the biggest automotive stories of the last few years. 

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Citytiger 19 March 2021

Lets totally honest, its £500, or less than half of one monthly payment (£1200) that Audi are asking for a subscription for an eTron, in the grand scheme of things its chicken feed. Its an amount these manufacturers could easily match or continue to offer as MG are going to.  Perhaps if these manufacturers offered to match the government £2500 grant, thus making it £5k I might have more sympathy. 

230SL 19 March 2021

All the milionaires have had the benefit of this grant against their Teslas and Jaguars, now that there are cars like the C4 and ID3 coming out, we can't have the majority benefiting can we? Don't go saying it can't be afforded, the £ has no intrinsic value it is Fiat money, this is the attitude which has increased inequality. When will people instead of saying they can't have some of that start shouting give me some of that. I'm dismounting my soap box now.

Andrew1 19 March 2021
Personally I think dropping the limit to 35k is a good move. This grant should not be used for luxury cars. It should also help driving the prices down for mainstream electric cars.
Bainthrewo 19 March 2021

I agree. People need to calm down, these are minor tweaks, the world won’t collapse overnight. Taxpayers cash should not be used to subsidise anyone able to afford a car worth over £35k. Reducing the threshold and level of grant means the pot will go further and thereby help more families into the lower cost EVs.  If the reduction of £500 stops someone from buying a new EV then they probably weren’t serious anyway. Mike Hawes and the SMMT will always find something to moan about.