Government fast tracks £650m Clean Energy Car Grant, bypassing normal referral procedure under UK subsidy control legislation.
In an unprecedented move, the UK government has fast-tracked a major new subsidy scheme aimed at boosting the switch to electric vehicles (EVs). Manufacturers must file an application for each EV that they think is eligible for the scheme, with funding being distributed on a first-come, first-served basis.
To be eligible for the grant, EV manufacturers must hold a valid science based target (SBT), as verified by the Science Based Targets initiative (SBTi) (ie. a greenhouse gas emissions reduction target that is aligned with the level of decarbonisation required to keep global warming below 2°C, or ideally 1.5°C, above pre-industrial levels, as defined by the Paris Climate Agreement). The grant will apply to EVs that meet various criteria, such as:
- List price of less than £37,000
- New car with no previous owner (not pre-registered)
- A range of at least 100 miles
- Minimum 3-year/60,000-mile warranty for the car
- Minimum 8-year/100,000-mile warranty for the battery
Once a model gets the green light, the discount is built into the price, so customers will see the discount appear directly at the dealership. Households will get a £3,750 discount on purchases of the most sustainably produced cars and £1,500 for cars that meet some environmental criteria. This recognises the need to address embedded carbon emissions across a vehicle’s lifetime, as well as tailpipe emissions.
Manufacturers can apply for the grant here. From a competition law perspective, what makes this particularly interesting isn’t just the size of the scheme; it’s how the government got it off the ground. Normally, under the UK’s Subsidy Control Act (SCA), a subsidy of this scale would need to go through a formal referral process. That means assessments, reports, and a review by the Competition & Markets Authority’s Subsidy Advice Unit to make sure everything is in compliance with the SCA and doesn’t distort the market. But this time, the Secretary of State invoked a special legal power to skip all that. Why? Because the government argued that the car industry is facing “urgent and exceptional circumstances.” With supply chain issues, falling sales, and pressure to meet climate targets, they decided that time was of the essence. So, for the first time ever, they used a legal exemption under section 64 of the Act to bypass the usual checks. The exemption came into effect on 14 July, just two days before the scheme launched.
This is a significant moment, not just for electric vehicle buyers, but for how the UK handles subsidy control. It shows that the government is willing to use emergency powers when it sees a pressing need, even if that means setting aside the usual safeguards. Whether this sets a precedent for future interventions remains to be seen, but for now, it’s a clear signal that the UK is serious about accelerating its green agenda.
Manufacturers will need to act quickly to get their grant applications in, as consumers may hold off on purchasing cheaper EVs until the discounts start to come online.
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