Electric Car Grant : £1.3bn boost for EV scheme expected in Budget

The government is expected to announce an additional £1.3bn for the Electric Car Grant at next week’s Budget—adding to the scheme’s initial £650m fund that offers up to £3,750 per eligible vehicle and has so far supported about 35,000 switches—although early research from New AutoMotive shows little evidence the subsidy has expanded the buyer base (EVs accounted for 23.8% of new registrations in September, unchanged). The Budget will also earmark about £200m to accelerate rollout of chargepoints and consult on easier curbside charging, while officials signal a potential pay‑per‑mile road charge for EVs from 2028 to replace fuel duty, creating a fiscal and policy risk that could influence EV demand, residual values and broader auto-sector investment dynamics amid political pushback on subsidies and taxation.

Analysis

The government is expected to add £1.3bn to the Electric Car Grant at the Budget, supplementing the initial £650m fund launched in July that offers up to £3,750 per eligible vehicle and which the government says has supported roughly 35,000 EV switches. Early evidence from New AutoMotive shows the subsidy has not clearly expanded the buyer base: EVs covered by the scheme accounted for 23.8% of new registrations in September, unchanged from the pre-grant period. That weak incremental demand signal raises questions about the subsidy’s short-term effectiveness in accelerating broader adoption.

The Budget is also expected to allocate about £200m to accelerate the rollout of chargepoints and consult on permitted development rights to ease curbside charging for households without driveways; Zapmap data shows nearly 87,000 points in roughly 44,000 locations today. Targeted funding and regulatory change would reduce a key infrastructure bottleneck and could materially benefit chargepoint installers, local authorities and curbside-solution providers, but execution speed and local capacity will govern near-term impact. The government frames these measures as improving access for those without off-street parking.

A prospective pay-per-mile charge for EVs from 2028 introduces a material fiscal and demand risk by effectively replacing fuel duty and raising total cost of ownership, while political pushback increases policy uncertainty. For automakers and dealers, unchanged registration share despite subsidies suggests pressure on pricing, incentives and residual values if demand does not broaden. The market impact is therefore mixed and contingent on the Budget’s final details, infrastructure rollout pace and consumer response.

Key Decisions for Investors

• Monitor registration share and follow-up studies from New AutoMotive and official uptake data before increasing exposure to OEM equities; do not assume the grant will create a new buyer pool
• Favor exposure to charging infrastructure providers, installers and curbside solution vendors given the expected £200m allocation and regulatory support, while tracking project timelines and local authority execution
• Limit or hedge exposure to dealers and aftermarket suppliers that depend on rapid EV volume growth given the lack of clear incremental demand and potential pressure on residual values
• Closely watch Budget language and the consultation on a pay-per-mile charge; if a road-usage tax becomes likely, reassess EV total-cost-of-ownership models and adjust valuations and positioning accordingly