The UK government has announced plans to introduce financial EV incentives. The move could see the number of electric vehicle sales increase, meaning the aftermarket would need to be prepared for an influx of work in the coming years.
Transport Secretary Heidi Alexander has unveiled a £650 million grant scheme, worth up to £3,750 per car, to boost EV sales as carmakers struggle to meet zero-emission vehicle mandate targets with falling consumer demand.
The subsidies, which will be available for cars under £37,000, will be available as soon as manufacturers successfully apply for their ZEV models to be part of the scheme from 16 July. Funding for the EV incentives scheme will run until the end of the 2028/2029 financial year.
However, cars will be assessed based on their sustainability credentials. Only the greenest vehicles in Band One will be eligible for the full £3,750 discount. Those in Band Two will see just £1,500 offered against the list price. This is likely to mean the cheapest BEVs, such as those imported from China, will only be eligible for the lower grant.
The government claims that upfront costs are one of the biggest barriers to entry for EV ownership. Therefore, this latest round of EV incentives will help to reduce that barrier, and give more drivers access to electric motoring.
Needed to be done
The news comes following another round of funding, with £63 million to support charging initiatives, including at-home charging, including allowing councils to dig channels in pavements, making it easier for drivers without off-street parking to charge their EV on the street.
“This EV incentives grant will not only allow people to keep more of their hard-earned money, it will help our automotive sector seize one of the biggest opportunities of the 21st century,” commented Alexander. “And with over 82,000 public charge points now available across the UK, we’ve built the infrastructure families need to make the switch with confidence.”
This latest move comes alongside the Zero Emission Vehicle (ZEV) Mandate, which requires manufacturers to sell increasing percentages of zero emission vehicles each year.
In recent months, the government has changed the mandate, with carmakers concerned that the 28% total fleet requirement to be ZEVs was not achievable. The industry struggled to meet the 21% requirement in 2024, with many carmakers only avoiding large fines by borrowing ‘credits’ against future totals.
So far in 2025, the number of all-electric models registered in the UK stands at 21.6% of total registrations. It is likely these industry concerns have prompted the new wave of EV incentives.
“This is further welcome news following last week’s announcement about more funding for pavement gully charging solutions that will enable those without driveways to charge an EV at home,” added RAC head of policy Simon Williams. “Together, these initiatives should mean more drivers than ever start benefitting from the lower costs of running an electric car.”
The problems with the EV incentives
However, many EVs, especially SUV models, still cost more than the £37,000 threshold for the EV incentives grants.
While there is funding for purchases, which will help an industry that has spent £6.5 billion on discounting since the start of 2024, there are still some barriers to entry for those looking to buy an EV.
In April, models costing over £40,000 at the time of purchase became eligible for the Expensive Car Supplement (ECS). This adds an extra tax payment to the vehicle between the second and sixth year of its registration.
The EV incentives barrier of £37,000 also eliminates a number of family cars, such as the Volkswagen ID.4, Hyundai IONIQ 5, and the Tesla Model 3. Instead models such as the Renault 5, Peugeot 208 and the VW ID.3 are eligible, as long as they meet the sustainability criteria. It is unlikely that models from MG, BYD, Omoda, Jaecoo and other Chinese manufacturers will meet the top criteria, due to their carbon footprint based on imports from China.
The EV incentives levels are also lower than those offered in other countries. Germany provided around £4,000 per vehicle in 2023, before it scrapped subsidies. Spain provides buyers with £6,100. France currently offers up to £3,700, but EV registrations in the country have tumbled this year.
Charging ahead
Additionally, the funding for pavement gullies does not take into account that many drivers who park on the street are often unable to do so directly outside their homes. The 21.7% of households who live in flats will also not be able to benefit.
This is the reason why the SMMT has been calling for a reduction in VAT on public charging points. It wanted to see rates reduced to 5%, the same as domestic charging, to make it fairer for all those without access to a driveway. The new plans do not include such discounts.
Stuart Masson, Editorial Director of The Car Expert, added: “At a time when an overwhelming majority of households buy used cars rather than new, focusing £650 million entirely on new vehicle sales seems short-sighted. There’s nothing here for used EV buyers – no support for those looking to switch from older, higher-polluting petrol and diesel cars to more affordable second-hand electric vehicles. If cutting emissions is the goal, would not helping these drivers make the most difference?
The aftermarket impact
The EV incentives will not make a big difference to the UK aftermarket straight away. However, anything that boosts sales of new cars will mean changes further down the line.
With a ban on the sale of new petrol and diesel cars from 2030, and all but ZEVs from 2035, the industry was already aware of potential change. But accelerating the sale of zero-emission models through these EV incentives means that in three years, even more electric cars could enter workshops.
This is why it is crucial that garages start to plan now. There are already more than 1.3 million all-electric models on UK roads. Adding full hybrids, and plug-in hybrids, and that increases to 3.4 million passenger cars. This may only be 10% of the total car parc, but this will grow rapidly.
“It is encouraging to see the government’s commitment to addressing some of the big barriers to electric vehicle adoption with this latest investment in infrastructure and EV incentives,” commented Sarah Sillars OBE HonFIMI, Interim CEO at the IMI. “However, it seems there is a lack of understanding about the critical role of EV skills to support net zero ambitions.
“Around 26% of the UK technician workforce currently holds an EV qualification, which means it can be a postcode lottery for an electric vehicle owner or driver to find a garage that can service or repair their vehicle” Sarah continued. “And this is only going to get worse as the EV parc grows. Our current estimates suggest that demand is likely to outpace supply by over 29,000 technicians by 2035.”
IMI Non-Executive Director, Ian Plummer (Commercial Director at Autotrader) added: “With more than half of consumers saying upfront expense is the biggest blocker to going electric, affordability is clearly the key to unlocking mass adoption. Support from government to ensure no one is left behind in the electric transition, including consumers and highly skilled technicians who can work safely on electric vehicles, would be a vital boost to mass adoption, if targeted correctly.”
The IMI is repeating its call for government to address the workforce needs of the automotive sector. Despite contributing significantly to employment, net zero ambitions, and clean growth, the automotive aftermarket is being overlooked across several government policies.
“This good news on EV incentives has a hidden barb,” commented Andrew Bates, MD of Straightset. “The question is whether there will be sufficient workshops capable of servicing EVs to cope with the inevitable aftermarket bubble to follow.
“Much of the automotive aftermarket industry has been sitting on the fence, waiting for government intervention before committing to any investment to EV servicing.
“Most businesses have not begun to consider the training required, or the equipment needed to prepare themselves for anything other than the most basic level of service functions.
“With these new EV incentives, the starting gun on the future of automotive servicing has been well and truly fired. It is time to get off the fence and gear-up or risk being left behind with an ever-dwindling customer-base,” added Bates.
Should the UK meet the ZEV mandate target of 28% this year, this could mean around 600,000 new all-electric models added to the country’s fleet. Meanwhile, hybrids continue to grow in number too.
Next year, 33% of new car registrations need to be ZEVs, growing to 38% in 2027, then 53% in 2028. Therefore, with or without EV incentives, numbers will continue to rise. As the sector is primarily driven by fleets, these models will likely enter the second-hand market after three years, making their appearance in independent workshops more probable.
Whether the EV incentives prove to be successful, therefore, the news that the government is pushing the adoption of the technology means the aftermarket needs to be ready for a potential influx, whenever that may be.
