The Government is preparing to announce an additional £1.5 billion in funding to boost EV adoption while simultaneously considering a new tax on electric vehicles.
Chancellor Rachel Reeves is expected to announce a £1.3 billion investment boost for the Electric Car Grant – designed to make EVs more affordable for drivers across the UK.
An additional £200 million will go to local authorities to accelerate public charging infrastructure deployment.
The ECG originally received £650 million in funding. According to government figures, the program has already helped 35,000 drivers purchase new EVs through discounts ranging from £1,500 to £3,750.
The additional funding should extend the scheme beyond the 2028/29 financial year. This timing aligns with manufacturers working to meet Zero Emission Vehicle mandate targets.
Government Backs Long-term EV Strategy
Amid speculation about the increased spending, Transport Secretary Heidi Alexander spoke to the BBC‘s Sunday with Laura Kuenssberg.
“This is an investment in the country’s future… and the good quality manufacturing jobs associated with that,”
she said, referencing Nissan’s EV production facility in Sunderland.
“So making sure that we are enabling people to buy a new electric vehicle if that’s what they want to do, whilst also investing in charging infrastructure, is the right long-term decision.”
The charging infrastructure funding specifically targets councils to help install on-street chargers – crucial for drivers without driveways or garages.
A government spokesperson explained the approach:
“The proposed funding will support the creation of thousands of charge points and provide extra resources for local authorities to ramp up charging infrastructure on local streets – making it easier for everyone to access reliable charging, including those without off-street parking.”
New EV Tax Under Consideration
While increasing EV purchase support, the Chancellor is reportedly planning a pay-per-mile tax specifically for electric vehicles.
The proposed scheme would charge EV drivers 3p per mile. This would add approximately £250 annually to the average driver’s running costs.
Senior automotive industry figures have warned such a tax could slow EV adoption progress and send conflicting signals about the Government’s electric vehicle commitment.
The Treasury argues the UK needs a fairer taxation approach for all drivers – particularly as falling fuel duty revenue from increased EV uptake requires offsetting through alternative revenue streams.
This dual approach of increased grants alongside new taxation reflects the Government’s attempt to balance EV adoption goals with long-term fiscal sustainability.
