UK ministers are considering guaranteeing consumer loans to boost electric vehicle (EV) sales by making low-interest or interest-free financing more accessible – according to a report from the Financial Times.
Discussions with the auto finance sector aim to lower monthly payments and bring EV costs closer to petrol and diesel vehicles.
The move could help car manufacturers struggling to meet sales targets and suggests the 2022 removal of EV purchase subsidies may have been premature.
While EVs remain more expensive upfront, over 80% of new UK cars are financed or leased, according to the Finance & Leasing Association.
Carmakers are pushing for measures to stimulate demand and expand charging infrastructure. Though EV sales are rising, they remain below targets and are largely concentrated in the company car sector, which benefits from tax incentives.
Under the ” zero-emission vehicle mandate, manufacturers like Volkswagen, Ford, and Renault must meet increasing sales quotas. The mandate requires 80% of sales to be zero-emission by 2030.
Non-compliance could mean fines of £15,000 per vehicle. Stellantis cited these regulations as a factor in closing its Luton van factory, while Ford linked them to UK job cuts.
The government is consulting the industry on adjustments but is unlikely to reinstate direct purchase subsidies. The previous plug-in car grant, initially £5,000 per EV, was phased out by 2022.
Falling used EV prices have increased repayments under “personal contract purchase” finance deals. Adrian Dally, the FLA’s motor finance director, said: “If there was a way where the government could underwrite cheaper loans… that would be extremely helpful.”
A Department for Transport spokesperson called 2024 a “record year for switching to electric,” with 382,000 EVs sold and nearly 20,000 new public chargers.
“We’re investing over £2.3bn to support industry and consumers make the switch.”
This series covers the developing electric vehicles market of the UK and its increasing infrastructure, as the nation advances its net-zero goals. For all things EV, don’t miss out on your free ticket to EVCharge Live UK – taking place 23-25 September 2025.
