How much is the Government grant for electric vehicles?

If you’re interested in electric cars or have been thinking about buying one but are a bit worried about the price, then there’s good news in the form of a Government grant that offers a discount on the retail price.

Although the amount available to drivers has recently fallen, the grant still remains an attractive incentive for would-be buyers and will definitely help off-set the cost of changing over to an electric vehicle.

What is the electric vehicle grant?

The electric vehicle grant is a Government-led initiative that gives customers a discount when buying a brand-new electric car. 

The discount is given to manufacturers and their dealerships and is automatically removed from the cost of the car when you buy it. It aims to help make vehicles with lower emissions more affordable and encourage more people to pick them over petrol or diesel-powered cars.

The grant is specifically for new cars that give off fewer Co2 emissions. A vehicle must have Co2 emissions of less than 50g/km and travel at least 112km without any emissions to be eligible for the discount. As you'd imagine, that includes all electric cars and some hybrids too. It now pays up to a maximum of £2,500 while the car itself must cost less than £35,000 to qualify.

The amount of the electric car grant - often referred to as the Plug-in Car Grant (PICG) - has fallen steadily since its introduction a decade ago, when it was worth up to 35% of the cost of a new vehicle, with a £5,000 cap.

Which cars are eligible for the electric vehicle grant?

• BMW i3

• BMW i3s

• Citroen ë-C4

• DS 3 Crossback E-Tense - Prestige

• DS 3 Crossback E-Tense - Performance Line

• Fiat 500e

• Honda e

• Hyundai IONIQ Electric - Premium

• Hyundai IONIQ Electric - Premium SE

• Hyundai KONA Electric (39kWh) - SE Connect

• Hyundai KONA Electric (39kWh) Premium

• Hyundai KONA Electric (64kWh) Premium

• Kia e-Niro (39kWh) - 2

• Kia e-Niro (64kWh) - 2

• Kia Soul EV

• Mazda MX-30

• MG MG5 EV (52.5kWh)

• MG MG5 EV (61.1kWh)

• MG ZS EV

• MINI Electric

• Nissan e-NV200 (5 Seater)

• Nissan e-NV200 (7 Seater)

• Nissan Leaf

• Peugeot e-208

• Peugeot e-2008 - Active Premium

• Peugeot e-2008 - Allure

• Peugeot e-2008 - Allure Premium

• Renault ZOE

• SEAT Mii Electric

• Skoda Citigo-e iV

• Skoda ENYAQ iV 60 Nav - ecoSuite

• Skoda ENYAQ iV 60 Nav - Lodge

• Skoda ENYAQ iV 60 Nav - Loft

• Skoda ENYAQ iV 60 Nav - Lounge

• Skoda ENYAQ iV 60 Nav - Suite

• Smart EQ fortwo

• Smart EQ forfour

• Vauxhall Corsa-e

• Vauxhall Mokka-e

• Volkswagen e-Golf

• Volkswagen e-up!

• Volkswagen ID.3 Pro (58kWh 145PS) Life

• Volkswagen ID.3 Pro Performance (52kWh 204PS) Family

• Volkswagen ID.3 Pro Performance (58kWh 204PS) - Life

• Volkswagen ID.3 Pure (52kWh 148PS) Family

• Volkswagen ID.3 Pure Performance (45kWh 150PS)

• Volkswagen ID.4 Pure (52kWh 148PS) Life

How has the electric vehicle grant changed?

In March 2021, the Government changed the funding towards low-emission and electric cars. The incentive package, including both the type of car eligible and the amount of discount, was downsized.

Previously, the maximum price of a vehicle that qualified for the grant was £50,000, but this reduced to £35,000. The maximum discount amount was also reduced from £3,000 to £2,500.

What does the change mean for drivers?

Because of the battery technology that powers them, electric cars are much more expensive than petrol or diesel ones. For example, the average price of a VW Golf is £22,833. However, a VW E-Golf (its electric counterpart) costs on average £27,575.

The purpose of the grant is to help incentivise people to purchase these more expensive cars that release fewer emissions and therefore have less of an impact on the environment.

Now that the maximum cost of a car eligible for the grant has reduced to £35,000, it has also meant that more expensive models like the Tesla 3, which costs £42,000, no longer fit the criteria for the discount.

But the Government claims this doesn't reduce the overall number of cars eligible for the grant, with the number of electric cars actually costing less than £35,000 growing by 50% since 2019. It also firmly believes the changes to the funding will allow more people to benefit from the financial incentive.

However, with the maximum discount available on any vehicle now reduced, this does mean that certain models that sit at the upper end of the cost band will be £500 more expensive than they were last year. For example, the VW E-Golf that costs £27,575 at retail would’ve cost consumers £24,575 last year with the grant. Now that the maximum discount has been reduced, it will cost consumers £25,075.

How much does it cost to charge an electric car?

According to the experts at Which? the cost per year ranges from £500 to £580 for a city car like the VW E-Up, through to £525 to £730 for mid-sized models like the Nissan Leaf or Tesla 3, through to £670 to £830 for large SUVs like the Audi E-Tron.

What are the benefits of buying an electric car?

The motivation to buy an electric car compared to a fuel-powered car is mainly about the environment. We all know that burning fossil fuels is not good for the planet. Electric vehicles are up to 30% cleaner because they don't burn any fossil fuels when driven. Instead, they're powered by an electric battery.

Electric vehicles also cost less to run, so although they're more expensive upfront, the cost will eventually balance itself out. Recharging an electric vehicle is cheaper than filling up with fuel and it will usually have a much longer lifespan. It also tends to be cheaper on average to service and maintain an electric car, but you may need to find a garage that specialises in electrics and hybrids.

The Government grant for electric cars was set up to help reduce the difference in the purchase price of an electric vehicle and encourage buyers to take the greener route. Yes, the recent change in funding will impact the upfront cost of an electric car compared to last year but it should hopefully still offer enough drivers an incentive to choose an electric model over a fuel-powered one.