What are government electric car grants?
Last updated December 21, 2021
In October 2021 the government pledged that it will spend £620 million on electric car grants and incentives in a bid to push the purchase of clean, zero emission vehicles ahead of the 2030 petrol and diesel ban. The UK’s Office for Zero Emission Vehicles have provided a range of different grants to aid individuals and businesses in purchasing an electric vehicle or installing charging points.
According to the SMMT statistics, there are currently 657,000 plug-in cars (including hybrids) on the roads in the UK. In addition, we recently found that only 15% of motorists wouldn’t consider an electric or hybrid car next, therefore the appetite for electric cars is apparent, but it seems that motorists still have some concerns about making the switch.
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UK plug-in car grant
The plug-in car grant, also known as the electric car grant, has been issued to make electric cars more affordable when compared to similar petrol/diesel vehicles. At present, comparable combustion vehicles have a lower purchase price, with 64.1% of the motorists we surveyed stating that the purchase price is one of their main concerns when thinking of switching to an electric car.
The maximum amount you can receive towards your EV from the government is capped at £2,500. This will be taken off the total cost of your car purchase and dealt with by the dealer you are buying from. As the customer, you will pay for the cost of the purchase minus the grant, and the dealership will claim back the qualifying amount from the OSEV after each sale. However, they do have to reduce their retail prices up front, so it is normal to see electric vehicles advertised at their reduced price.
Unfortunately, you will only receive this grant if you are purchasing a brand-new EV, with used and pre-registered cars not being eligible. However, it is possible that used electric cars will see a drop in price because of the price reduction when not purchased new.
Home charging government incentives
The government has also introduced an incentive to install home car chargers. They will contribute 75% towards the cost, up to the amount of £350 (including VAT) of installing a charger at your home. All vehicles that have been approved as ultra-low emission vehicles by the Office for Zero Emission Vehicles are eligible for the Electric Vehicle Homecharge Scheme.
The Electric Homecharge Scheme also includes the vehicles that may no longer be eligible for the plug-in car grant incentive because they exceed the category 2 or 3 price cap, or they are no longer on sale in the UK. This could be beneficial for those who would prefer a more expensive car when moving to an electric vehicle or if they’re upgrading their current electric vehicle.
There are certain rules around the cars and the chargers that are eligible for the grant, such as the charger will need to be an officially approved ‘smart’ charger. You can find all the relevant information for eligibility here.
What are the OSEV standards?
Previously, the grants were slightly more attractive with a cap of £5,000 rather than £3,000 and there were three categories that vehicles were split into depending on their electric range and CO2 emissions. The OSEV standards are now based on just two requirements; how much carbon dioxide a vehicle produces and how far it can travel without any emissions. The amount of money you can receive from the grant also differs on the type of vehicle, which can be seen in the table below:
| CO2 Emissions | Electric range on a single full charge | Grant vehicle is eligible for | Grant value cap | |
|---|---|---|---|---|
| Cars | Under 50g/km | At least 70 miles | 35% of RRP | £2,500 |
| Motorbikes | 0g/km | At least 31 miles | 20% of RRP | £1,500 |
| Mopeds | 0g/km | At least 19 miles | 20% of RRP | £1,500 |
| Vans | Under 50g/km | At least 60 miles | 35% of RRP | £3,000 or £6,000 |
Which vehicles qualify for the electric grant?
The amount of money you will receive from the electric vehicle grant depends on the category the vehicle is placed in. There are 7 categories in total, which are:
- Cars
- Motorcycles
- Mopeds
- Small vans
- Large vans
- Taxis
- Trucks
The cars that qualify for the grant under the OSEV standards have CO2 emissions of less than 50g/km and can travel at least 70 miles (112km) with zero emissions. The price of the vehicle will also establish whether it is eligible for the government grant, and they must cost less than £35,000. This will be the cars recommended retail price (RRP) and includes VAT and delivery fees. You can find a full list of the car make and models eligible for the grant here.
FAQs
You will be automatically entitled to the grant when purchasing a new eligible electric vehicle and the dealer will do everything on your behalf. Usually, the dealer will automatically apply the discounted price including the grant at the point of sale.
You can still purchase an electric car using finance and be eligible for the grant, the same as if you were purchasing the car by paying in full. The amount you’re eligible for will be taken off the RRP and your monthly payments will be reduced. As the price of the car is reduced, you will also pay less interest over the course of the finance agreement.
Finance agreements are still eligible for the grant, as if you were purchasing the car upfront the grant will be removed from the RRP and your monthly payments will be reduced.
