Free magazine subscription
Early data suggests the UK’s new Electric Car Grant is sending a strong market signal, but may be rewarding existing EV buyers rather than driving new ones. The UK Government’s Electric Car Grant (ECG) – a £650 million scheme launched in July 2025 to make battery electric vehicles (BEVs) more affordable – has shown a mixed impact in its first full month of operation
According to New AutoMotive’s new analysis, “That Fuzzy Feeling: A First Analysis of the Impact of the Electric Car Grant,” BEV models eligible for the scheme accounted for 23.8% of new registrations in September 2025, identical to their share before the grant was announced. The finding suggests that the ECG has yet to expand the total market for electric cars, instead largely subsidising vehicles that consumers were already planning to buy.
The report, based on registration data from the DVLA and DVSA, shows modest evidence of “within-brand switching” – buyers opting for an ECG-eligible model from a manufacturer instead of a non-eligible version. However, there is little indication that the grant has attracted entirely new EV buyers or significantly reshaped the overall market balance.
“The Electric Car Grant has sent a strong signal of government commitment to EVs, supporting consumer confidence, the expanding used market and green jobs in markets closer to home,” says David Farrar, policy manager at New AutoMotive. “But it isn’t yet clear that it’s prompting consumers to consider buying cars that they wouldn’t have gone ahead and bought anyway.”
Farrar added that the fund – intended to last until 2028/29 – could be depleted two years early at its current rate of spending. “Policies at no taxpayer cost at all could support 10 million in making the switch by lowering the cost of public charging and making it easier to charge at home,” he adds.
Although the ECG has not yet moved the overall market share needle, its impact varies widely between models. The Ford Puma and Nissan Ariya – both eligible for the higher “Band 2” grant – saw notable gains in registrations. By contrast, several high-volume models from VW Group (including Skoda, Volkswagen and Cupra) and Renault lost ground, despite also being covered by the grant.
Meanwhile, manufacturer-funded “ECG-style” discounts from brands such as MG and Volvo proved effective, boosting market share without direct public subsidy. New AutoMotive notes that these company-backed schemes may have delivered stronger short-term results than the government-funded ECG itself.
The fiscal implications of the scheme are substantial. New AutoMotive estimates that the first month alone may have cost up to £31 million, with Ford and VW Group and their customers capturing nearly two-thirds of the benefit.
If monthly spending continues at this pace, the entire £650 million budget could be exhausted by 2026/27, one to two years earlier than planned. The grant can support at most 400,000 car buyers, a fraction of the 10 million motorists who face structural barriers to affordable EV ownership.
Despite the high cost, the ECG’s direct market impact therefore appears modest. The data implies that many buyers of eligible models would have proceeded with their purchases regardless of the subsidy, raising questions about the scheme’s cost-effectiveness.
Where the ECG appears most effective is in market signalling, however. The grant has reassured both consumers and industry that government remains committed to the EV transition after several years of shifting policy. Its introduction also triggered a competitive response from non-eligible brands, which have introduced price cuts or new finance incentives to remain attractive, further increasing consumer savings. In that sense, the ECG may have amplified its indirect impact through market competition rather than direct sales.
Moreover, the visibility of the scheme has driven marketing momentum across the sector. Automakers offering both government-supported and self-funded discounts have invested in advertising to highlight their affordability. Even firms without any grants have stepped up campaigns to emphasise the value of their existing EV offers. This “free money effect,” as New AutoMotive describes it, has generated substantial publicity for electric cars overall.
The analysis also highlights a persistent inequality at the heart of the UK’s EV market: charging access. Around 10 million drivers – renters, leaseholders and those without off-street parking – face running costs up to seven times higher than those who can charge at home.
ZapMap data show that slow public charging averages 51p/kWh, compared with around 7p/kWh for off-peak home charging. As long as this gap persists, lower-income and urban households will remain excluded from the full economic benefits of going electric.
New AutoMotive argues that addressing these disparities through planning and infrastructure reforms would deliver greater long-term impact at minimal taxpayer cost. Suggested measures include:
These low-cost policy interventions could make EV ownership genuinely affordable for millions more drivers, while reducing the need for expensive purchase subsidies.
The first month’s data offers only an early snapshot of the ECG’s performance. New AutoMotive emphasises that further analysis over the coming quarters will be essential to determine whether consumer behaviour evolves as awareness of the grant spreads and as more eligible models reach showrooms.
For now, the key takeaway is clear: the Electric Car Grant is bolstering confidence rather than driving conversion. It demonstrates commitment, strengthens industry signalling, and keeps electric mobility in the headlines, but at a high fiscal cost and with uncertain long-term benefits.
As Farrar concludes, “We are running out of time to deliver the fair, effective suite of policy solutions required to accelerate the uptake of EVs. Structural changes to charging and access will do far more to open up the market than short-term grants ever could.”







© Setform Limited 2019-2025 | Privacy policy | Archive

source