Government electric car grant: the complete guide

Government car grant is cut after surge of orders. New electric car subsidy drops to £3,500 and is axed for hybrids. List of eligible cars

BuyaCar team
Nov 23, 2020

The government’s electric car grant has been cut after a surge in orders exhausted funds almost three weeks early.

Prices of new cars are expected to rise now that the subsidy has been reduced from £4,500 to £3,500 towards the cost of a brand new electric car.

Cost increases are likely to be greater for plug-in hybrid cars, as they no longer benefit from a £2,500 grant, which has been axed completely.

These vehicles include the Mitsubishi Outlander PHEV and have large batteries that can be charged up, allowing them to travel several miles on electric power alone. They also have an engine to take over when needed. Prices could go up by ten per cent on the cheapest models, such as the Hyundai Ioniq PHEV.

Used cars have never been eligible for the grant, but searches for second-hand electric vehicles have risen sharply since the announcement, and the anticipated increase in new car prices.

Grants for electric vans and motorbikes remain unchanged at up to £8,000 and £1,500 respectively. There are also government incentives towards the cost of home charging points for both new and used electric and plug-in hybrid car buyers. The grants are funded from taxpayers’ cash and distributed by the Office for Low Emission Vehicles, which is part of the Department for Transport.

The electric car grant changes were announced by the government’s Office of Low Emission Vehicles in October 2018. The resulting rush of orders used up the remaining cash within ten days - almost three weeks earlier than scheduled.

The subsidy has helped to boost electric and hybrid car sales since it was launched, giving more than 160,000 drivers a discount on a brand new car. As demand for these greener cars continues to rise and prices for them start to fall, the government has decided to cut the grant to ensure that it can continue in a shrunken form until 2020, without any additional funding.

UK electric car grant

  • Fully electric cars, such as the Nissan Leaf, Renault Zoe, BMW i3 and Jaguar I-Pace see the plug-in car grant towards new vehicles cut to £3,500.
  • Plug-in hybrids, including the Mitsubishi Outlander PHEV and Mini Countryman PHEV are no longer eligible for a subsidy towards the purchase price.
  • Electric motorbikes and mopeds are eligible for £1,500 grants.
  • If you’re buying an electric van, you could get a discount of up to £8,000.
  • Almost all electric vehicles qualify for a grant of up to £500 towards a home charging point.

The incentive is needed because their large battery packs make electric cars more expensive than an equivalent petrol- or diesel-powered model. Prices are predicted to fall in price in coming years, but until then, a grant is needed to make them competitive.

For example, an electric Volkswagen e-Golf costs £32,730 before the grant, over £10,000 more than the popular Golf 1.6 TDi SE Navigation (£22,335). The e-Golf qualifies for the full £3,500 grant, and if you factor in fuel savings, the e-Golf starts to look like a viable alternative.

But not every electric car is eligible for the full grant. And some don’t qualify for anything. The grant isn't available for used cars either.

Which cars qualify for the electric car grant?

Given that its official name is the plug-in car grant, it’s unsurprising that the only cars eligible are those that you plug in to recharge.

That means that most brand new electric cars, which are powered only by their electric motors, will qualify for an incentive which reduces their purchase price. These inlcude the Nissan Leaf, Renault Zoe, Tesla Model S and Jaguar I-Pace.

Plug-in hybrid cars (known as PHEVs) were eligible for a grant until October 2018. These have a petrol or diesel engine, but also a large battery pack that can power the car for 20 miles in some cases. These cars no longer qualify, but buyers of new and second-hand PHEVs are usually eligible for a discount on a home charging point.

See the full list of cars that qualify for the electric car grant at the bottom of this article.

How much is the electric car grant worth?

The most you can get is 35% of a car’s purchase price - up to a maximum of £3,500, but this only applies to cars that meet certain criteria, including the requirement for a range of at least 70 miles on a single charge.

A grant of £1,500 is offered towards the cost of electric motorbikes and mopeds.

If you’re thinking of buying an electric van, you could be eligible for £8,000 towards the cost.

How is the electric car grant calculated?

Plug-in vehicles must meet certain criteria in order to qualify for a grant. Cars are put into three categories, depending on their range from a single charge and carbon dioxide emissions, which determines how much of an incentive they qualify for.

The figures used come from the standard European test that every new car model must undertake. They aren’t representative of real-world conditions (cars generally have a shorter range and higher CO2 emissions in normal driving), but are currently the only common standard.

In some cases, a car’s recommended retail price (RRP) affects its eligibility for a grant. The criteria for each category are summarised in the table below, with a more detailed explanation further down.


CO2 emissions

Electric range from one charge


Grant cap

Cars: category 1

Under 50g/km

At least 70 miles

35% of RRP




At least 31 miles

20% of RRP




At least 19 miles

20% of RRP



Under 75g/km

At least 10 miles

20% of RRP


Plug-in grant Category 1
Maximum grant £3,500

Vehicles in category one qualify for the full grant. In theory, this is worth up to 35% towards the cost of the car, but there is a maximum cap of £3,500. This means that any electric car costing more than £10,000 - the vast majority - will get the flat £3,500 grant.

These are the qualifying requirements:

  • Electric range of at least 70 miles on a single charge
  • Average carbon dioxide emissions below 50g/km
  • No limit on the car’s price

The majority of vehicles in this category are pure electric cars, with no petrol or diesel engine, so they have no carbon dioxide exhaust emissions.

There is also the hydrogen-powered Toyota Mirai, as well as all versions of the BMW i3 (above), including the so-called range-extender car, which has a small petrol engine that can recharge the battery on the move.
More eligible cars

Plug-in grant Category 2 & 3
Grant abolished

Category 2 and 3 cars are plug-in hybrid models, which were previously eligible for a discount. This changed in October 2018, so buyers of new cars no longer get any government money towards the cost.

Most of these vehicles are eligible for up to £500 towards the cost of a home charging point.

Plug-in grant Motorbike category
Maximum grant £1,500

Pure electric motorbikes that use battery power only are eligible for a grant worth 20% of their recommended retail price, up to a maximum of £1,500. They must be able to travel for at least 31 miles before needing a recharge.

Plug-in grant Moped category
Maximum grant £1,500

Fully electric mopeds, without a petrol or diesel engine qualify for a grant of 20% of their recommended retail price, up to a maximum of £1,500 - the same as electric motorbikes. However, mopeds don’t need the same range: they only need to go for at least 19 miles between charges, which is good enough for city riding.

Plug-in grant Van category
Maximum grant £8,000

The largest plug-in grants are available for electric vans, worth 20% of their recommended retail price - up to a maximum of £8,000. Given their size and weight, the requirements are less arduous than for cars. To qualify, vans need to be able to travel for at least 10 miles on electric power without needing to recharge, and have CO2 emissions of less than 75g/km. The Renault Kangoo ZE (above) is one of the vans that meet the criteria.

Can I get an electric car grant for used cars or pre-registered cars?

No. The grant is only available for the first owner of brand new cars, ruling out any used cars, including pre-registered vehicles, which normally count a dealership as the first owner. Home charging grants are available for buyers of new or used cars.

How do I claim the grant?

You don’t need to do anything. The supplying dealer does it on your behalf and automatically reduces the price of the car by the value of the grant.

Can I get the electric car grant if I’m buying on finance?

Yes, the grant will be deducted from the total price, which will reduce your monthly payments.

Can I be paid the electric car grant in cash?

This isn’t an option. As it’s designed to boost sales of plug-in cars, the grant is only used to adjust the price: you never actually see the money, let alone get it in your pocket.

Does the plug-in grant make electric cars as cheap as a petrol or diesel models?

It certainly closes the gap, but you’ve also got to factor in how much it will cost you to run the car.

For example, the plug-in grant brings the price of the Volkswagen e-Golf down to £28,690.

That’s still £6,625 more expensive than the comparable diesel Golf SE Navigation, but you’ll be able to claw back some of that in running costs, including tax - there's no car tax due on the e-Golf.

If you drive around 8,000 miles a year, you’ll spend around £825 a year on fuel for the diesel Golf but only £160 on charging the e-Golf, based on a rate of 2p per mile suggested by Pod Point, which makes electric chargers. If your annual mileage is greater, then the savings will increase.

However, the e-Golf is expected to lose more of its value. After a typical three-years of ownership, it may be worth just a third of its new price, compared with around 40% for conventionally-powered Golfs.

If you take out personal contract purchase (PCP) finance, this difference in the cars' used values is factored into your monthly payments, making it simpler to compare the cost of running them.

In other cases, the grant can make electric cars cheaper than their diesel equivalent, After the £3500 grant has been deducted, the pure-electric Renault Zoe costs £15,245 compared with £15,755 for a Renault Clio Play dCi 90. This price doesn't include the cost of the Zoe's batteries so you’ll need to hire them, which costs roughly as much as the fuel for the diesel Clio.

Electric Golf vs diesel Golf over three years


Manufacturer price (includes grant)

Fuel cost (8,000 miles/year)

Car tax

Value lost over 3 years

Total cost of ownership

Volkswagen e-Golf






Volkswagen Golf 1.6 TDI SE Nav






Sources: Equa Index, Pod Point, Cap hpi

Has the electric car grant boosted sales of plug-in cars?

It’s a slow process but sales of electric vehicles are growing, boosted by new models, such as the latest Nissan Leaf. In the first four months of this year, 3,645 cars eligible for the plug-in grant were sold, according to the Society of Motor Manufacturers and Traders, an industry body. This accounts for 2.1% of the overall new car market, and is a 47% rise compared with the same period last year.

Electric car grant changes

The grant was first launched in 2011, when the government was offering £5,000 off the price of plug-in cars.

There was no price limit, so taxpayers were subsidising buyers of cars that included the £100,000 BMW i8 and £90,000 Porsche Panamera S E-Hybrid (above).

It was also a major boost to plug-in hybrid cars such as the Mitsubishi Outlander PHEV, which aren’t as green as fully electric cars, but had enough battery range to qualify for the grant.

In March 2016, the scheme was revamped. The maximum incentive was cut to £4,500, categories were introduced, which meant that plug-in hybrids generally lost half of their subsidy and the price cap was introduced for categories 2 and 3.

The scheme altered again in October 2018 when the discount was cut to £3,500 for electric cars and was axed entirely for plug-in hybrid vehicles.

How long is the electric car grant scheduled to last?

By cutting the level of the grant and the cars eligible for it, the recent changes to the scheme are meant to ensure that it can continue until 2020 at present funding levels, as demand for electric cars increases. Depending on sales volumes, the government may decide to reduce the grant further before it disappears entirely.

The cost of plug-in vehicles is already falling, which is another reason for the government to cut back the subsidy. Volkswagen’s updated Golf GTE plug-in hybrid was almost £3,500 cheaper than its predecessor when it was launched last year, as the cost of batteries - the reason for electric cars’ price premium - comes down.

Renault predicts that by 2020, it will be selling electric cars for the same price as petrol and diesel models.


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