In their party manifesto, Labour committed the government to a Plan for Change that, as one of its core initiatives, vowed to transform the UK into a “clean energy superpower”. As part of this, the government restored the more ambitious 2030 deadline for phasing out ICE (internal combustion engine) vehicle sales, which had been pushed back by the previous prime minister, Rishi Sunak.
Moreover, the Zero Emission Vehicle (ZEV) mandate was announced that obligates manufacturers to annually increase the percentage of their sales that is electric: for 2025, the target is 28 percent. If manufacturers are unable to achieve this, each non-electric vehicle below this threshold will cost them £12,000, although they can include electrification of their fleet as “sales”.
Despite the government’s efforts to encourage manufacturers to churn out more EVs, interest in and uptake of EVs has increased sluggishly since the Conservatives terminated the previous Plug-in Car Grant (PICG) three years ago, which entitled buyers of EVs below £32,000 to a £1,500 subsidy. Figures from across the industry have been quick to criticise the incumbent Labour government for a lack of incentives to reinvigorate EV sales in the UK, with the majority of transitions to electric being attributed to manufacturer fleets rather than private owners. As such, sales in the UK are currently trailing the projected level required to meet the 2030 deadline.
However, the government has now taken action to address the need for incentives on private EVs. On the 15th of July 2025, the Department for Transport announced a new £650 million Electric Car Grant (ECG), which allocates a maximum £3,750 discount for new EVs below £37,000 and will be run until the 2028-29 financial year, unless cancelled prematurely due to a lack of funding. The maximum is crucial here as the discount is flexible and varies according to a series of conditions the government is yet to divulge completely.
What is clear is that EVs will be assigned to bands based on how much CO2 is released during the manufacturing process. With this system, vehicles that are more energy efficient and environmentally friendly in their production will be entitled to a larger grant, with vehicles in bands 1 and 2 receiving £3,750 and £1,500 respectively. As of now, it is unclear if more bands will be introduced.
Another factor affecting eligibility is a manufacturer’s science-based targets (SBTs). These are essentially plans for how a manufacturer will shrink their carbon footprint and improve sustainability, which, according to a DfT spokesperson, will be evaluated against an index which is “based on the carbon intensity of different grids”.
In contrast to the previous PICG grant, it is manufacturers that will have to apply for their vehicles to qualify for the grant rather than customers. Applications will be assessed under a first-come, first-served regime to verify that the models registered satisfy sustainability and price requirements. A list of the conforming models will be released by the government in the upcoming weeks.
The ECG represents only a fraction of the £4.5 billion the government has promised to invest to boost the domestic EV market, facilitate the transition to electric on the roads, and place the UK at the spear tip of sustainable motoring. Alongside the grant, the government has also injected £63 million into making home charging more accessible, particularly for those without a driveway, and electrifying the NHS fleet.
To support the increasing population of EVs, expanding the national network of charging points has become a top priority for the government, with thousands being installed at business depots. According to ChargeUK CEO Vicky Reed, the UK now has “82,000 charge points and a new one goes in the ground every 29 minutes on average.”.
The new EV grant has been widely praised, with SMMT chief Mike Hawes stating that the announcement “is a welcome response to consistent calls from the industry for more support” and “is a clear signal to consumers that now is the time to switch.”.
Consequently, this has reaffirmed the government’s dedication to sustainability, e-mobility, and providing financial support for drivers to combat the cost of living. Labour has already fixed fuel duty at 5 pence until spring 2026 and set aside £1.6 billion for filling in potholes. The ECG is a vital step in helping consumers make the change to electric, but only time will tell if further measures are required.