The UK Government is discussing potential subsidies with vehicle finance providers to increase private electric vehicle sales through lower-cost loans, the Financial Times reports.
While fleet sales of EVs continue rising — driven by company car tax benefits — private sales lag without similar incentives. The auto industry has repeatedly called for measures to attract retail buyers.
Government officials are considering underwriting private sector loans to enable finance companies to offer low or zero-interest EV financing, according to FT sources. This approach aims to bring monthly EV payments closer to petrol vehicle costs.
Vauxhall currently achieves price parity on select models through extended loan terms, which require longer vehicle commitments. Though EVs carry higher list prices than combustion vehicles, most buyers use financing — making loan rates crucial to purchase decisions.
The Society of Motor Manufacturers and Traders (SMMT) reports record EV sales last year came at significant cost:
- Manufacturers spent billions on discounts
- Current discount levels are unsustainable
- ZEV mandate targets continue rising
Manufacturer requirements for zero-emission vehicle sales increase from 22% in 2023 to 28% in 2024, reaching 80% by 2030. While no companies faced fines last year, many relied on carbon credit trading or borrowed future allowances as EV sales fell below 20%.
The UK previously offered direct buyer support through the Plug-in Car Grant:
- Started at £5,000 per vehicle
- Reduced to £1,500 over time
- Ended completely in 2022
This made Britain the only major European nation without private EV buyer incentives — a move widely considered premature by industry experts.
Sources indicate restarting direct grants would be too costly, leading to the focus on financing support. The government also announced £65 million in additional funding for kerbside charging infrastructure, addressing another key industry concern.
