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In the rapidly evolving world of electric vehicles (EVs), incentives and tariffs are playing a significant role in shaping the automotive landscape.
In the UK, new grants and guarantees have significantly boosted consumer interest and new-car registrations, especially for EVs meeting stringent sustainability criteria aligned with Science-Based Targets (SBTs). The UK government’s £650 million electric car grant program offers up to £3,750 off EVs, while manufacturers like Volkswagen, Skoda, and Cupra have launched a £1,500 "grant guarantee" to supplement or assure the government grant. This combined effort has led to a strong increase in EV registrations [1][2][4][5].
However, in July 2025, UK new-car registrations saw a 5% year-on-year decline, despite a 9.1% growth in battery electric vehicle (BEV) deliveries. The incentives were introduced too late to impact July's registrations [6].
Across the Channel, Germany is noted as one of the European countries using consistent government policies and carbon reduction mandates to promote electric car uptake. While detailed recent data on incentives' exact impact on registrations is less explicit, it is clear that Germany's approach is aiding EV registrations [3]. In July 2025, the German new-car market recorded double-digit year-on-year growth, with BEV registrations rising by 58% to capture an 18.4% market share [7].
In contrast, the US car industry is facing challenges due to tariffs. While no direct recent data on tariffs' impact on carmakers’ financial results was found, it is generally understood that tariffs can increase manufacturing costs and affect profitability for carmakers importing vehicles or components. General Motors, for instance, expects the tariff situation to worsen in the third quarter and has committed to previous estimates of a $5 billion hit to its bottom line this year [8].
Meanwhile, in the world of EV manufacturing, US battery maker Lyten is making strategic moves. It has entered into a binding agreement to acquire Northvolt's remaining assets in Sweden and Germany, valued at approximately $5 billion. The deal includes Northvolt Ett and Ett Expansion, Northvolt Labs in Sweden, Northvolt Drei in Germany, and all of Northvolt's remaining intellectual property. Lyten is also pursuing the acquisition of Northvolt Six in Canada, which is constructing a 15GWh phase one battery manufacturing facility [9].
The incentives in the UK and Germany, and the tariff challenges in the US, underscore the complex interplay of factors shaping the EV market. Manufacturers must commit to a science-based target on emissions and pledge to cut greenhouse gas emissions in line with the Paris Agreement on climate change to qualify for incentives [10]. Funding is based on the carbon emissions of the country where key production stages are located, including vehicle assembly, powertrain introduction, and battery production location.
References:
- BBC News
- Gov.uk
- CleanTechnica
- The Guardian
- Autocar
- SMMT
- SMMT
- Reuters
- Reuters
- European Commission
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