How are the UK’s new EV incentives actually shaping the electric car market?
Car makers across the UK have been practically begging for fresh incentives to get more drivers into electric vehicles. Since the start of 2024, the pressure has only grown. The government’s Zero Emission Vehicle (ZEV) mandate, introduced a year and a half ago, means manufacturers face hefty fines if they don’t sell enough EVs. But here’s the catch: the actual demand for electric cars just isn’t keeping pace with those targets. Nearly every major car executive has made it clear—they need government help, or else.
Manufacturers have been scrambling to avoid those fines, and so far, they’ve managed. But it’s come at a steep price. According to the Society of Motor Manufacturers and Traders, car makers have shelled out a staggering £6.5 billion in discounts just to tempt buyers. That’s not pocket change. Compare that to the government’s new Electric Car Grant (ECG), which totals £650 million, and you start to see why some in the industry are calling the scheme divisive.
What’s really behind the new Electric Car Grant?
The ECG isn’t a simple, one-size-fits-all discount. Instead, it offers either £3,750 or £1,500 off, depending on a maze of criteria—most notably, the carbon intensity of the electricity grid in the country where the car was made. Sounds technical, but the real-world impact is pretty clear: it’s a way to favor certain imports over others.
Many see this as a subtle move to exclude cheaper Chinese-made EVs from the scheme, without going as far as the European Union’s direct import tariffs. Instead, the UK has set up what it calls a ‘Science Based Target’—but critics argue it’s more of a political smokescreen than a genuine environmental measure. And here’s a twist: the scheme doesn’t even factor in the carbon emissions from shipping cars to the UK. That means vehicles from China could be penalized, while those from closer countries like Korea or Japan get a pass. No wonder there’s grumbling from overseas.
Will the ECG make a real difference for buyers and the market?
Let’s talk numbers. If every grant handed out was at the lower £1,500 level, the ECG would subsidize just over 430,000 new EVs. For context, the UK saw about 225,000 EVs sold in the first half of this year alone. And with the ZEV mandate ramping up, that £650 million could be gone by late spring next year. In other words, the pot isn’t bottomless.
This limited funding means the ECG is likely to provide only a short-term boost to EV sales. It’ll help manufacturers hit their compliance targets for now, and the government will probably tout it as a win. But industry voices are already calling for more—especially investment in charging infrastructure, which remains a major stumbling block for many would-be EV buyers.
Why do EVs still need government incentives, even in mature markets?
It’s not just a UK problem. According to Felipe Munoz, a senior analyst at Jato, there isn’t a single country where EVs thrive without government incentives. Even Norway, often held up as the gold standard for electric adoption, relies on perks like tax breaks and reduced tolls. In China, buyers get their license plates faster and at lower rates if they go electric or plug-in hybrid. The message is clear: without active government support, EVs just can’t compete with traditional petrol and diesel cars—at least, not yet.
What’s the bigger picture for the UK’s EV future?
The ECG is a step, but it’s not the whole journey. The UK’s approach—using carbon intensity as a filter—raises tough questions about fairness and effectiveness. It’s also a reminder that incentives alone aren’t enough. To truly shift the market, the government and industry need to work together on everything from charging networks to battery recycling.
The big takeaway? Getting more EVs on UK roads isn’t about perfection—it’s about smarter adjustments. Start with one change this week, and you’ll likely spot the difference by month’s end.