The British government is in discussions with car finance providers to explore subsidised loans for electric vehicle (EV) purchases, aiming to increase affordability for private buyers, the Financial Times reported.
The initiative comes as the UK, now Europe’s largest EV market ahead of Germany, struggles to meet its official targets for private electric car adoption. While corporate EV sales have benefited from tax incentives, private registrations have lagged since subsidies ended in 2022.
See also: UK Surpasses Germany as Europe’s Largest Market for Pure Electric Cars in 2024
One option under consideration is for the government to subsidise financing or leasing costs, as over 80% of electric cars in the UK are purchased through such arrangements. The goal is to bring EV costs closer to those of petrol and diesel vehicles.
“The industry welcomes any move to support private buyers, as achieving the Zero Emission Vehicle (ZEV) targets is crucial,” an industry source told the FT. In 2024, EV sales made up 19.6% of new cars sold, falling short of the 22% target. The mandate rises to 28% in 2025 and 80% by 2030, with manufacturers facing fines of up to £15,000 per non-compliant vehicle.
See also: UK Electric Vehicle Production Drops 20% in 2024 Amid Industry Transition
While direct purchase incentives are considered unlikely due to their impact on public finances, government-backed interest-free loans are seen as a more viable alternative. The final cost of such a scheme will depend on its structure, the report added.
