Core Viewpoint - The UK government announced a £650 million electric vehicle subsidy plan to stimulate demand and support the transition to zero-emission vehicles (ZEV) in response to regulatory requirements and current market conditions [1][2]. Summary by Sections Subsidy Background - The subsidy targets the ZEV regulations set for 2024-2035, which require increasing ZEV penetration rates from 22% in 2024 to 100% by 2035. As of 2024, the actual penetration rate for battery electric vehicles (BEV) in the UK is 19.6%, with 225,000 BEVs sold in the first half of 2025, a year-on-year increase of 34.6% [1][2]. Penalties and Compliance - Manufacturers failing to meet ZEV targets will incur fines of £15,000 per vehicle. However, the new policy introduces a three-year grace period allowing manufacturers to "borrow" up to 25% of their future quotas if they cannot meet current year requirements from 2024 to 2026, with repayment required between 2027 and 2030 [2]. Subsidy Comparison - The current subsidy is more substantial than previous cycles, with discounts per vehicle reaching up to £3,750, compared to £1,500-£3,000 during the 2020-2022 period [2]. Impact Assessment - The £650 million subsidy is expected to support the sale of approximately 173,000 electric vehicles over the next 2.5 years, averaging about 69,000 vehicles per year. Assuming the total number of passenger cars remains stable, the BEV penetration rate could reach 28.1% in 2025 with the subsidy, compared to a projected 26.3% without it [2].