An overwhelming majority of car makers have craved the return of incentives to boost demand for electric cars in the UK, with ever-greater desperation since the start of 2024.

The ZEV mandate introduced by the government 18 months ago meant manufacturers faced significant fines for not selling enough EVs, and barely an interview with a top UK executive from a legacy car maker has gone by - several in this column - without them saying they need government help to hit those targets because there is not enough true market demand for EVs.

To date, car makers have managed to comply with the mandate and avoid fines. Yet with their own discounts on new EVs totalling £6.5 billion in an effort to tempt buyers into them, according to Society of Motor Manufacturers and Traders data, it has come at a huge cost.

Against £6.5bn of discounts, the £650 million put aside by the government for the Electric Car Grant (ECG) looks like loose change. No wonder one senior industry official described the scheme to me as one that would “divide opinion”, and not only for the sums involved. 

The ECG is banded with discounts of £3750 or £1500, depending on complex criteria around the intensity levels of carbon in the grid of the country of manufacture of each EV.

We await details of how this will work, but one interpretation of it is as a back-door way of excluding low-cost Chinese-made EVs from the scheme. Rather than apply import tariffs like the EU has done on such cars, the UK looks to have chosen not to subsidise them and instead has created a ‘Science Based Target’ as a political smokescreen to hide behind. 

That the ECG doesn’t appear to factor in carbon emissions from the shipping of cars would surely have those in China wondering why they’re being hit while cars coming from nearby Korea and Japan aren’t.

If all the discounts were only the lower £1500 figure, the ECG would cover subsidies towards just over 430,000 new EVs. Some 225,000 EVs were sold in the UK in the first half of this year, and given that the ZEV mandate’s target is ramping up each year, the ECG money could conceivably run out by late spring next year.