THE newly announced Electric Car Grant goes further than just personal lease customers, according to BVRLA clarification following conversations with OZEV.
The new Electric Car Grant will benefit all purchases of qualifying electric vehicles – not just private buyers as we previously thought (see today’s Broker News newsletter – 15 July 2025).
The original Government bulletin was steered towards the private benefit of the new £650m grant, but further detail has emerged that will see all households benefit, although undoubtedly the primary beneficiary will be drivers interested in personal leasing or acquisition.
But fleet and salary sacrifice providers will also benefit.
What electric cars qualify?
Cars must have an RPP that is below £37,000 and the rules will be similar to the previous Plug-in Car Grant, as will the grant delivery mechanism.
There are two bands. The most that can be claimed is £3,750 (band one) while band two vehicles can receive £1,500.
The banding is dependent on environmental criteria, which, according to the Government, “is in recognition of the need to address embedded carbon emissions across a vehicle’s lifetime, as well as tailpipe emissions. Vehicles that do not meet minimum sustainability standards will not be eligible for a grant.”
Essentially, the amount of grant per car will depend on the level of emissions associated with production of the vehicle – OEMs committed to a verified Science-Based Target (SBT) and have embodied carbon scores below a certain threshold – in which case many Chinese models may fail to qualify due to the carbon intensive nature of Chinese manufacture.
OEMs need to apply to have their vehicles registered for the grant. Only orders from 16 July will be accepted.
Salary sacrifice orders qualify for the new Electric Car Grant
Electric cars will be available to salary sacrifice takers under the new grant, which will really benefit lower income drivers.
According to the Electric Car Scheme, the £3,750 grant spread over a typical three-year lease reduces monthly costs by approximately £104, when applied to a car valued at under £37,000 providing lower rate taxpayers with £75 per month savings and higher rate earners with £60 a month savings.
Thom Groot, founder of the Electric Car Scheme, said on LinkedIn:
“It’s often said that the high upfront cost of electric cars is holding people back, and our own data shows it’s the biggest blocker for more than half of potential drivers. But here’s the truth: millions of people are ready and waiting. If the cost barrier came down, they’d make the switch in a heartbeat. This move will be welcomed by the millions of Brits who otherwise would love to get behind the wheel of an EV.”
Fleets: fill your boots
Qualifying fleet cars will also be eligible for the grant, with no cap on the amount of EVs that can be ordered by a fleet. As more affordable EVs come to market, this will accelerate the benefits to company fleets beyond the National Insurance savings and should help lower the total cost of ownership.
No doubt more detail will appear in the future, and Broker News will keep you updated about the latest developments.
Read more on the Electric Car Grant
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Ralph Morton is the leading journalist in the leasing broker sector and editor of Broker News, the website which provides information and news for BVRLA-registered leasing brokers. He also writes extensively on the fleet and leasing market in both the UK and Europe.
