In July 2025, the UK Government reintroduced the Electric Car Grant (ECG), and for many automotive dealers and retailers, it’s a positive change. Several employee car benefits are available through dealerships, which have a direct impact on both a company’s employees and the business itself.
With savings of up to £3,750 on eligible Electric Vehicles (EVs), the ECG makes switching to electric more affordable and attractive. It also supports the Zero Emission Vehicle (ZEV) Mandate, which requires one-in-three of all new car sales to be zero-emission in 2026 – helping manufacturers and retailers keep pace with the move toward cleaner transport.
Whether you already have EVs available on your CBS scheme or you’re just starting your transition, this Government grant can help shape a smarter, cost-effective strategy for your business.
In this guide, CBS discusses what the Electric Car Grant is, how it works, and how automotive retailers can make the most of it in their business.
The Electric Car Grant is a £650m Government initiative designed to accelerate the UK’s shift to electric driving. It applies to new EVs priced under £37,000, with the discount applied by the manufacturer before the vehicle reaches you or your employees.
The Electric Car Grant is available to:
– Individuals
– Businesses
– Drivers accessing vehicles through leasing or salary sacrifice.
Electric Car Grant Tiers:
- Band 1: Up to £3,750 off vehicles with the strongest sustainability credentials.
- Band 2: Up to £1,500 off vehicles meeting the minimum qualifying standards.
Why does the Electric Car Grant matter for automotive dealers and retailers?
As a retailer, you’re in a unique position – you’re both an employer offering employee benefits and a business that sells or supplies them. The ECG can influence both sides:
Better value for your employees
Lower vehicle pricing means more competitive salary sacrifice quotes and a more appealing company car list.
Higher EV uptake
The grant helps employees choose electric sooner, helping your business stay aligned with industry trends and sustainability expectations.
Stronger internal engagement
Offering better-value EVs boosts employee satisfaction and helps retain key staff in a competitive market.
Support for dealership brand positioning
As EVs become more accessible, retailers demonstrating leadership in electrification strengthen their reputation with both customers and employees.
How the electric car grant works with salary sacrifice
Salary sacrifice lets your employees exchange part of their salary for the use of an EV. And because the deduction happens before tax, they access significant savings.
EVs are especially popular under salary sacrifice. Here are some of the reasons:
Lower tax bills
Employees pay Benefit-in-Kind (BiK).
National Insurance savings
You save on employer NIC because your employees’ gross salary is reduced.
All-in-one convenience
Combine an EV salary sacrifice scheme with your existing petrol, diesel, hybrids, and PHEVs all under one scheme provider.
How the grant helps salary sacrifice
- Lower upfront vehicle cost = lower lease rentals.
- Lower rentals = smaller salary sacrifice reductions.
- Smaller reductions = employees can consider higher-spec EVs for the same budget.
Below is an example scenario of how the grant could help:
An EV priced at £36,000 may now qualify for a Band 1 discount of £3,750, bringing it down to £32,250. This could reduce an employee’s monthly sacrifice by £50 – £100, depending on terms and mileage.
For the latest list of approved vehicles, always check the official gov.uk website.
How this supports dealership profitability
Beyond employee benefits, the ECG can support your dealership’s financial performance:
Predictable budgeting
Lower lease rentals reduce vehicle costs and help control your spending.
Higher take-up rates
More attractive pricing through salary sacrifice leads to higher adoption – increasing engagement with your internal reward offering.
Improved Residual Value management
EVs supported by the grant often align with models forecasted to perform well in future used markets.
Strategic tips for retailers managing employee car benefits
- Review your vehicle list
Identify qualifying EVs under £37,000 and consider adjusting your internal car tiers. - Communicate clearly with employees
Simple messaging about grant benefits and salary sacrifice savings goes a long way. - Plan for charging solutions
Whether through home charger support or workplace charging, confidence in infrastructure boosts uptake. - Stay informed
The ECG may evolve – keep up to date on model eligibility and Government updates.
With the CBS Salary Sacrifice scheme, you get:
- A scheme built specifically for automotive retailers.
- Seamless integration with your existing employee car benefit offering.
- Full control of the level of benefit and the ability to adjust RVs and mitigate risk.
- Support from experts who understand dealership operations.
To learn more about how our scheme supports the shift to electric, check out our automotive salary sacrifice page.
The Electric Car Grant isn’t just a short-term discount – it’s a helpful tool that supports long-term planning. For automotive retailers, it offers a chance to boost internal engagement, strengthen your employee car benefits, and lead the way in electrification.
At CBS, we know every retailer is at a different stage in their EV journey. Whether you’re already offering electric or just beginning, we’re here to help you take the next step confidently.
Get in touch to explore what the ECG and salary sacrifice could mean for your business.