Office for Zero Emission Vehicles, Electric Car Grant Subsidy Scheme

The Electric Car Grant Subsidy Scheme operates as a grant, applied as a direct discount on the purchase price of eligible zero-emissions cars. It is a UK-wide Scheme, running from 1/4/26 – March 2030, or until the budget of £1.84bn is exhausted. This builds on the previous 2011-2022 plug-in car scheme and is a continuation of an existing scheme launched in 2025. This is a Subsidy Scheme of Particular Interest as it supports beneficiaries in a sensitive sector (the manufacture of motor vehicles).

Our key takeaways from the Subsidy Advice Unit report are:

• When considering alternatives, tax-based measures specifically should be discussed in detail, including their relative cost and distortionary impact.
• When considering the counterfactual scenario, available evidence should be drawn upon, and the impact of policies which would continue in the counterfactual should be discussed.
• The impact on the beneficiaries’ behaviour should be considered in detail with specific reference to the policy of the Scheme, with reference to relevant evidence.
• In assessing the proportionality of the Scheme using choice modelling, the tests used in the modelling and the outcomes obtained should be explained to establish that the Scheme is set at the minimum necessary to achieve the policy objective.
• The assessment should set the Scheme in the appropriate context by providing relevant data (in this case, the number of ZEVs covered by the Scheme relative to the number of all new electric vehicles and relative to the number of vehicles required by the ZEV mandate).
• In discussing design features of the Scheme which are aimed at minimising negative effects on investment or competition, the assessment should explain how the relevant view was reached, clarify how any rules will be applied in practice, clarify how and when eligibility might be amended, and use data from previous schemes to support assertions and to provide further detail on the monitoring and review of the Scheme.
• Generally, where previous Schemes are available, the assessment should use existing data to provide an indication of the magnitude of likely impacts of the Scheme on competing manufacturers and competition.
• The assessment should systematically demonstrate how the positive effects have been weighted against the negative effects to determine that the benefits outweigh the costs, including considering the distributional and geographical impact of the Scheme, and the potential impact on international trade or investment.

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