Reeves to extend electric vehicle grant in Autumn Budget

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Rachel Reeves will extend the UK’s electric car grant for another year with an extra £1.3bn in next week’s Budget, as Sir Keir Starmer stressed he was optimistic about the future for businesses and investors in Britain.

The EV grant has helped around 35,000 drivers switch to electric, cutting the purchase price by around £3,750, according to government data.

The chancellor will also announce around £200mn to increase the rollout of charge points. The scheme will be extended to 2029/30.

The move marks an attempt to bolster the market for electric vehicles. Sales are rising but remain below the government’s target as it plans to phase out the sale of new petrol and diesel models by 2035.

“I’m optimistic about the future and I want to create the conditions in which we enable business to generate wealth and do as well as humanly possible in the UK,” the prime minister told reporters on Saturday.

Asked what his message was for wealthy Britons considering leaving the UK as a result of higher taxes, Starmer said that “lots of investors are choosing to invest in the UK”.

The FT reported earlier this year that only two EVs would qualify for a £3,750 discount under the government’s £650mn subsidy scheme. Applications launched in mid-July and run until 2028/29, but car manufacturers had to wait weeks to find out whether their models were eligible.

Starmer will announce on Sunday that Britain will aim to produce more of the raw materials used to make EVs, as well as items such as smartphones and fridges, in a bid to reduce the UK’s reliance on China and shore up the domestic supply chain.

Britain will aim to produce 10 per cent of its raw material needs domestically and 20 per cent through recycling by 2035, he will say. Currently the UK makes just 6 per cent of the critical minerals that it needs, according to government data.

“For too long, Britain has been dependent on a handful of overseas suppliers, leaving our economy and national security exposed to global shocks,” Starmer said. “We are taking decisive action to change that.”

The UK government said it would deploy £50mn to support domestic minerals projects.

The UK is particularly reliant on imports of some critical materials for the production of EVs, wind turbines and F-35 fighter jets. China dominates the production of many of these minerals, from rare earth elements to lithium and nickel.

UK demand for copper — used for electric plugs and car brakes — is set to almost double by 2035, while demand for lithium — used in batteries — will increase by 1,100 per cent, according to government estimates.

Britain has no commercial-scale lithium mines. Cornish Lithium, which has been pushing for the government to set a domestic production target, is aiming to produce 25,000 tonnes a year by 2030.

The government will also consider stockpiling minerals, as the EU is doing.

In the US, the Pentagon has sought to procure up to $1bn-worth of critical minerals for its defence stockpile in recent months.