New price cap limits luxury EVs
The Government’s Electric Car Grant (ECG) is just over a month old, but ministers have already introduced stricter rules to limit which vehicles qualify for support.
Launched on 15 July, the ECG is designed to boost electric car sales after a slowdown in demand from private buyers. The scheme offers up to £3,750 off the price of some new EVs in an effort to make them more appealing and speed up the switch to electric.
To keep the grants focused on affordable vehicles, only cars with a starting price under £37,000 are eligible, and manufacturers must meet strict sustainability standards. So far, 28 models have qualified.
Now, a new £42,000 price cap has been introduced, cutting higher-specification and luxury versions of these models out of the scheme. This has added further complexity to a programme already criticised by dealers and industry experts for being confusing and poorly executed.
How the grant works
The ECG has £650 million of funding allocated until 2028–29. To be eligible, carmakers must apply for their EVs priced below £37,000, and the Department for Transport (DfT) assesses them on environmental grounds such as battery production emissions and the energy mix in the country of manufacture. Cars that don’t meet the minimum standards are excluded, with Chinese-made EVs widely expected to miss out.
Qualifying models are then placed into two categories:
- Band 1 (most sustainable) – full £3,750 discount.
- Band 2 – partial £1,500 discount.
Of the 28 approved so far, only the Ford Puma Gen-E and E-Tourneo Courier qualify for Band 1.
Price cap affects trim levels
The new price cap now removes certain trim levels even if the base version qualifies. For example, the entry-level Nissan Ariya Engage (under £37,000) qualifies for a £1,500 Band 2 grant. Until now, this discount applied across all front-wheel-drive Ariya models, even those costing more than £37,000. But the top-end Evolve trim, priced above £42,000, has now been ruled out due to its premium features like a panoramic roof and luxury interior upgrades.
Ministers argue that buyers spending over £42,000 do not need taxpayer-funded subsidies. However, critics warn the rule could also block access to advanced safety technology, often reserved for higher trims.
Government defends the scheme
A DfT spokesperson defended the move, saying:
“The Electric Car Grant is putting money back in people’s pockets while giving industry a boost. The maximum price limit ensures only lower-priced cars qualify, keeping support targeted.”
Slow rollout frustrates buyers and dealers
The scheme has been slow to roll out, with eligible models announced in small batches each week. This drip-feed approach has frustrated dealers and buyers alike, with many motorists holding off purchases until they know which EVs qualify. It took more than three weeks for the first four Citroën models to be approved, with the most recent six only added last Thursday.
Industry leaders have criticised the process. Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said the delays had contributed to a dip in registrations in July as buyers waited for clarity.
Jon Lawes, managing director of Novuna Vehicle Solutions, called the scheme’s rollout “rushed” and “poorly consulted,” adding:
“Manufacturers are scrambling to check eligibility, while customers are stuck in limbo wondering if they’ll save up to £3,750. This risks slowing demand further, especially for private buyers.”
Dealers say scheme is ‘shambolic’
Retail bosses have echoed these concerns, with one dealer describing the scheme as “shambolic” and another criticising the piecemeal announcements. Some customers have even walked into showrooms demanding the full £3,750 discount, unaware their chosen car has not been approved.
Overall, the ECG was meant to be a simple incentive to encourage EV adoption. Instead, many in the industry argue it has created more uncertainty, delays, and frustration for both buyers and sellers.
