Understanding the UK Government's Electric Vehicle Grants

Published30 December 2021
in Advice
Understanding the UK Government's Electric Vehicle Grants

On the 15th December 2021 it was announced that the Plug-in Cars Grant (PiCG) criteria diminished effective immediately. This follows an industry 88.9% increase in electric car sales year-on-year, 10% up on 2020.

There will be a difference to both individual and business owners, affecting all vehicles over a £32,000 retail price.  Available grant support was previously £2,500, deducted from any cars £35,000 and under; and now cars worth £32,000 may be eligible for grant support of just £1,500. 

The PiCG grants have made going electric more feasible for many, and this is the third time the grant has been cut, so it is going to be a barrier to some in making the move to electric.   

The Good

  • Clearly any form of financial and grant support from the Government allows making a change like moving electric, a more attractive route – everyone likes a discount!  Indeed, the transport minister stated:

"The market is charging ahead in the switch to electric vehicles.  This, together with the increasing choice of new vehicles and growing demand from customers, means that we are refocusing our vehicle grants on the more affordable vehicles and reducing grant rates to allow more people to benefit, and enable taxpayers’ money to go further.”

  • We are looking at a population in which is in the “adoption” stage of electric, and well on the way to make the 2030 cut-off successful. The UK Government is hoping that the impact of the reduction will be limited, with a previous cut to the PiCG grant earlier this year reducing cars with a retail price of £40,000 receiving a £3,000 grant, and purchasers still taking advantage of the reduced grant support.

  • Although there are now limits for fleet drivers wanting to take their vans electric; smaller vans, which carry 2.5 tonnes, are now sitting with a grant of £2,500, and those that carry 3.5 tonnes will receive £5,000.

  • The government is currently still offering £350 to all private individuals and commercial premises UK-wide. This is currently being capped off on April 1st 2022. Please see more here on charge point grant support available with a new order of an electric vehicle. 

Volkswagen ID.3

The Bad

  • The £35,000 threshold was a “sweet spot” most manufacturers looked to take advantage of, with vehicles such as the Volkswagen ID.4, Skoda Enyaq, Kia eNiro 2, Nissan Leaf, Vauxhall eCorsa and a few others.  Now, with pricing changes, we at P+B have already seen clients less interested in these particular models than before, and we will not be surprised if manufacturer to look to adapt and deduct pricing from their retail prices.  We have already have seen Vauxhall negotiate and make changes.
  • To provide an example of the impact the deduction in grant has made on both a cash purchase and a business contract hire agreement since the 15th December, here are the new costs of a Volkswagen ID.3:


  • Was: £29,700 (£32,200 with grant support of £2,500)
  • Now: £33,200 

Business Lease:

  • Was:  £330 per month ex VAT (36-month contract, 1-month up front, 10K miles)
  • Now: £412 per month ex VAT (36-month contract, 1-month up front, 10K miles)

Nissan Leaf


Clearly significant changes are within the EV space, which has come at a questionable time for all manufacturers, finance companies and individual clients as we near the end of the financial year.  Nicolas Lyes from the RAC stated, "We’re concerned the Government has taken this step too soon."

Richard Peberdy, Head of Automotive at KPMG UK, said “Today’s grant cut reduces consumer incentivisation to make the switch to electric vehicles, at a time when inflation is rising and wider economic uncertainty continues."

"Although the timing of this decision is questionable, the automotive industry remains confident about the path to net zero.  Our recent global automotive survey suggests that industry executives see a strong need for subsidy schemes right now to aid the transition to EVs.  But, over three quarters of executives told us that even if subsidy schemes were totally removed, EV adoption will still be widespread by the end of this decade.”

Our team at P+B are completely converted to the world of electric, and we’ll continue to bring you guidance and advice on how we can make your move to EV life more affordable, seamless and hassle-free.