Does Ed Miliband’s new £3,750 grant make it worth buying an electric car? How to

Car buyers are being offered a cash incentive to purchase a new electric vehicle (EV) for the first time in three years.

The Government’s Electric Car Grant (ECG) – part of Energy Secretary Ed Miliband’s drive to net zero – will offer up to £3,750 towards the cost of a new EV.

However, the size of the discounts depends on how ‘sustainable’ the EV is – and the rules have left drivers confused.

So will the grants make EVs a cheaper option than petrol? Here’s what you need to know before you buy – and how to weigh up the costs.

What is the Electric Car Grant?

The ECG offers car buyers money off new all-electric models that are sustainably manufactured and priced at – or under – £37,000.

It is Labour’s take on the Conservatives’ Plug-In Car Grant, scrapped in 2022. The £650million scheme was revealed last month and runs until 2028-29.

Depending on how ‘green’ the car-production process is, they will fall into band 1 or band 2 of Government support, giving drivers either a £3,750 or £1,500 reduction to the price of eligible EVs.

The Government says the ECG will make ‘owning an electric car cheaper, easier and a reality for thousands more people across the UK’.

The ECG offers car buyers money off new all-electric models that are sustainably manufactured and priced at – or under – £37,000

Which car makers are in the ECG?

At the time of writing, Citroen, Vauxhall, Nissan and Renault have models confirmed for the ECG – but only the lower £1,500 grant – with 17 EVs between them now automatically discounted for buyers.

Among the eligible EVs, the retro-inspired Renault 5 and Nissan Micra EVs are standouts – showing drivers can get behind the wheel of electrified nostalgic nameplates for less than £21,500.

While other manufacturers wait to hear whether they have been accepted some have proactively introduced their own electric car ‘grants’.

Chinese car makers such as MG were the first to react to the Government’s ECG news, but European marques including Alfa Romeo, Volvo and Skoda soon followed with discounts of up to £3,750 off selected EV models, creating a mini price war.

Leapmotor, Great Wall Motors, and Skywell have their own discounts as well, as do Fiat, Volkswagen, Cupra, Smart, Suzuki, Kia and Hyundai.

BYD is not offering a cash discount but instead giving buyers extended battery warranty across its entire range of EVs and five years’ free servicing.

How stringent is the ‘green’ criteria?

The criteria are rigorous and complex, and have left drivers, EV experts, and carmakers themselves scratching their heads. Rather than simply looking at tailpipe emissions of EVs, the Government is addressing the carbon emissions across the vehicle’s entire lifetime, rewarding the carmakers with the ‘highest manufacturing sustainability standards’.

Manufacturers must hold a Science Based Target, verified by the independent Science Based Targets initiative, which aligns with the Paris Agreement goals.

The Government assesses the carbon intensity of the electricity grid in the country where the vehicle is assembled and the battery produced.

Renault’s E5 is among the models to be confirmed as being eligible for the ECG so far

It’s bad news for Chinese EVs: Transport Minister Lilian Greenwood recently warned that the Department for Transport doesn’t expect ‘any cars that are assembled in China to be eligible for the scheme’ because the country relies too heavily on coal power stations.

However, as EV manufacturing is a global business there are several European marques that could also be penalised for having part of their production based in China, making them eligible for only the £1,500 grant or nothing at all.

Why aren’t all makers part of the ECG?

Instead of coming up with a list of models that meet the ECG sustainability standards and releasing this alongside the grant announcement, the Government has instead asked carmakers to apply retrospectively to qualify.

The Department for Transport and Office for Zero Emission Vehicles say they are processing applications as fast as manufacturers can file them and will update the online list of eligible models as they are approved.

But that means manufacturers are out until they’re in, and the public and the car industry are being drip-fed the discounts as they come, causing hesitancy and uncertainty.

Figures from the Society of Motor Manufacturers and Traders (SMMT) revealed a cooling of EV sales in July. EV sales made up 21.3 per cent of the new car market last month.

At least 28 per cent of new cars sold by each manufacturer in the UK this year must be electric under the Government’s Zero Emission Vehicle (ZEV) mandate. Manufacturers that miss this target can expect fines.

Should you wait for the grant?

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