Highlights
- Over 2 million new cars registered in UK for first time since pandemic; 23.4 per cent were electric vehicles, below 28 per cent government target.
- Manufacturers offered £11,000 average discount per EV, totalling over £5bn, to meet Zero Emission Vehicles Mandate requirements.
- Industry calls for early review of ZEV Mandate as stricter 33 per cent target looms for 2026 amid rising costs and market challenges.
The UK motor industry has warned that massive discounts on electric vehicles are "unsustainable" despite new car registrations exceeding two million for the first time since the pandemic, with concerns growing over the widening gap between consumer demand and government targets.
The Society of Motor Manufacturers and Traders (SMMT) reported 2,020,373 new cars were registered in 2025, marking the third consecutive year of growth. However, the figure remains significantly below the 2.3 m vehicles sold in 2019.
Electric vehicles accounted for 473,340 new registrations, representing a 23.4 per cent market share, a substantial increase from 2024 but falling short of the government's 28 per cent target under the Zero Emission Vehicles Mandate (ZEV Mandate).
The mandate imposes heavy fines on carmakers failing to meet electric vehicle sales quotas, though flexibilities allow manufacturers to avoid penalties through emissions reductions or purchasing surplus credits.
SMMT chief executive Mike Hawes described the results as "reasonably solid" amid challenging economic conditions but raised alarm over the sustainability of current practices.
The industry provided over £5bn in discounts last year, averaging £11,000 per electric vehicle sold, to meet regulatory requirements.
EV incentives concerns
"It is increasing the number of battery electric vehicles being sold," Hawes told BBC.
"The question is, at what cost?" He urged the government to bring forward a planned 2027 review of the ZEV Mandate, particularly as manufacturers face a more demanding 33 per cent target this year alongside rising energy prices and raw material costs.
Eurig Druce, Stellantis UK's group managing director, echoed calls for an early review, stating "the UK is increasingly out of step with the position in Europe and the rest of the world."
He emphasised that accelerated review would provide manufacturers with investment certainty and help consumers make informed purchasing decisions.
Environmental advocates offered contrasting perspectives. Colin Walker of the Energy and Climate Intelligence Unit welcomed the "bumper year for EV sales," noting benefits for the second-hand market.
However, Ginny Buckley of Electrifying.com warned that drivers lack confidence, requiring "clear messaging and policy stability" to achieve the one-in-three sales target.
The government introduced measures including a £2bn Electric Car Grant Scheme offering up to £3,750 per vehicle, though autumn Budget plans for a per-mile EV tax have raised industry concerns about mixed messaging affecting consumer confidence.
