Ministers have unveiled subsidies of up to £3,750 in a desperate bid to boost electric car sales.
Taxpayers are pumping around £650million into cutting the prices of EVs until 2028-29 so they are more attractive to drivers.
However, the move – part of the Net Zero push – will not cover Teslas as they cost more than the £37,000 limit. BMWs, Audis and Mercedes are also outside the price range.
The Government has pledged to ban the sale of new fully petrol or diesel cars and vans from 2030, but there are concerns that the industry is not on track to hit targets.
The grants effectively resurrect support that was ditched by the Tories three years ago.
Transport Secretary Heidi Alexander said: ‘This EV grant will not only allow people to keep more of their hard-earned money – it’ll help our automotive sector seize one of the biggest opportunities of the 21st century.
Taxpayers are pumping around £650million into cutting the prices of EVs until 2028-29 so they are more attractive to drivers (pictured)
Transport Secretary Heidi Alexander said: ‘This EV grant will not only allow people to keep more of their hard-earned money.’
‘And with over 82,000 public chargepoints now available across the UK, we’ve built the infrastructure families need to make the switch with confidence.’
Only fully electric models priced at £37,000 or less are eligible for the new grants of up to £3,750, with funding confirmed up until 2028-29.
The scheme will not immediately be available because manufacturers need to apply for eligibility for vehicles in their ranges, rather than buyers registering grants at the point of purchase.
Not all grants will be worth £3,750, with the discount determined by how green the manufacturing process is for each model.
The greenest vehicles will be in band one, while band two vehicles will receive up to £1,500. Chinese EVs are not expected to meet the criteria for the grants.
Funding will remain under review, with the scheme subject to amendments or an ‘early closure with no notice’ should the pot of available money ‘become exhausted’, the DfT clarified.
The Government’s hope is that by making the most financially attainable EVs even more affordable, it will make switching more appealing to private buyers rather than just those who lease more expensive EVs or acquire them as company cars or through salary sacrifice schemes.
Around 50 different models are expected to be eligible for the grants, but no Teslas appear to qualify.
Keir Starmer and Elon Musk were embroiled in a bitter spat last year after the billionaire attacked the PM over the grooming gangs scandal.
There are also a number of electric cars that are just over the £37,000 threshold and manufacturers are likely to review whether to lower the RRPs on these models in order to qualify.
Drivers buying electric cars can benefit from tax breaks if their employer has a company car scheme, but there have been no universally available grants since they were axed by the Conservative government in June 2022.
The DfT announced last week that road signs for electric vehicle charging hubs will be introduced on major A roads in England.
It also launched a £25million scheme for local authorities to support residents without off-road parking to recharge electric cars using cables connected to their homes which run along gullies embedded in pavements.
Under the Government’s zero emission vehicle (Zev) mandate, at least 28 per cent of new cars sold by each manufacturer in the UK this year must be zero emission, which generally means pure electric.
Across all manufacturers, the figure during the first half of the year was 21.6 per cent.
Keir Starmer announced in April that sales of new hybrids that cannot be plugged in will be permitted to continue until 2035.
Changes to the Zev mandate also mean it will be easier for manufacturers who do not meet the targets to avoid fines.
Conservative shadow transport secretary Gareth Bacon accused the Government of ‘forcing families into more expensive electric vehicles before the country is ready’, adding the reintroduction of grants would mean ‘more pain for taxpayers’.
He said: ‘Last year, only one in 10 private purchases of new cars was electric. This is a product people demonstrably do not want.
‘Last week, the Office for Budget Responsibility made clear the transition to EVs comes at a cost, and this scheme only adds to it. Make no mistakee: more tax rises are coming in the autumn.’
The Conservative Environment Network also described the grants as ‘a waste of taxpayers’ money’, given declining prices for electric vehicles, but urged the Government to invest in charging infrastructure instead, ‘giving confidence to a new generation of drivers to go electric’.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said the announcement is a ‘clear signal to consumers that now is the time to switch’.
He went on: ‘Rapid deployment and availability of this grant over the next few years will help provide the momentum that is essential to take the EV market from just one in four today, to four in five by the end of the decade.’
However, the move – part of the Net Zero push – will not cover Teslas (pictured, the firm’s boss Elon Musk) as they cost more than the £37,000 limit. BMWs, Audis and Mercedes are also outside the price range
Keir Starmer and Elon Musk were embroiled in a bitter spat last year after the billionaire attacked the PM over the grooming gangs scandal
RAC head of policy Simon Williams said discounted cars should start appearing at dealerships ‘within weeks’.
He added: ‘As the biggest savings will be given to cars with the strongest green manufacturing credentials, drivers will be picking models that are not only better for their wallets, but better for the planet too.’
Dan Caesar, chief executive of lobby group Electric Vehicles UK, said: ‘While battery-only EVs are much cheaper to buy and run than most realise, surveys show that cost misperceptions are the primary reason for hesitance.
‘A generous grant of this nature gives a new group of interested buyers a gentle nudge.’
Ian Plummer, commercial director of online vehicle marketplace Auto Trader, said ‘any incentives’ to help people buy an electric car are welcome as many drivers are ‘put off by the high upfront cost’.
