Vauxhall cuts EV prices below £40,000 to sidestep new UK tax

Vauxhall reduced EV prices under £40,000 to avoid the UK's Expensive Car Supplement, saving buyers over £2,000 in road tax. Learn more.

From April 1, significant changes to electric vehicle (EV) taxation took effect in the UK, prompting swift reactions from automakers. Vauxhall was among the first to respond, cutting prices across its EV lineup to bring all models below the £40,000 threshold—thus avoiding the newly expanded "Expensive Car Supplement."

The flagship Grandland Electric Ultimate saw a price drop from £40,495 to £39,995, while the Astra Electric Sports Tourer Ultimate was also reduced to £39,995 from £40,695. These changes aim to protect buyers from the annual £425 surcharge applied to cars priced over £40,000 (including options), which is levied for five years starting from year two, on top of the standard £195 vehicle tax.

Previously exempt from Vehicle Excise Duty (VED), EVs now face the same charges as internal combustion engine vehicles. This means that over a six-year period, EVs priced above £40,000 will incur a total tax bill of £3,110—while those under the threshold will pay £985, resulting in a £2,125 difference.

Fleet operators and dealers had hoped the Chancellor would reverse the measure in the Spring Statement, but no such announcement followed. Although the government acknowledged concerns about the potential impact on the EV market, it proceeded with the policy as planned.

The effects are already surfacing: UK car production dropped by 11.6% in February 2025, with EV and hybrid output down 5.6%. Industry analysts warn that the revised tax structure could further slow momentum in the electric segment.

Other manufacturers—including Citroën and Tesla—have also adjusted pricing to stay competitive. Consumer interest is shifting toward models that fall under the £40,000 threshold, influencing sales strategies across the market.

The Treasury has stated that the reform is vital for fiscal stability, while reaffirming its commitment to electrification. Incentives such as grants for charging infrastructure and the temporary return of EV purchase subsidies remain in place to support the transition.

Whether the policy shift will hinder or merely temper EV adoption remains uncertain. But one thing is clear: the £40,000 price point has become the new critical boundary in the UK's electric vehicle landscape.

Source: am-online.com