The UK's new car market exceeded 2 million registrations in 2025 for the first time since the pandemic, with electric vehicles accounting for almost a quarter of sales - but the industry body representing carmakers says the discounts required to reach that figure cannot continue.
According to figures from the Society of Motor Manufacturers and Traders, 473,340 battery electric vehicles were registered last year, giving EVs a 23.4% market share. That represents a 23.9% increase on 2024, and makes the UK the second-largest EV market in Europe by volume, behind Germany.
The figure still falls short of the government's 28% target under the Zero Emission Vehicle mandate, however, and the SMMT claims manufacturers subsidised sales by more than £5bn to get even that far - equivalent to around £11,000 per vehicle.
ZEV mandate pressure mounts as targets rise
The ZEV mandate requires carmakers to ensure a rising proportion of their UK sales are zero-emission, or face fines of up to £15,000 per vehicle. The 2025 target was 28%; this year it rises to 33%, with 80% required by 2030.
Mike Hawes, the SMMT's chief executive, described the discounting as "unsustainable" and called on the government to bring forward a planned review of the mandate, currently scheduled for 2027.
"It is increasing the number of battery electric vehicles being sold," Hawes said. "The question is, at what cost?"
The gap between actual EV sales and the mandate target widened last year. In 2024, the shortfall was 2.4 percentage points; in 2025, it was 4.6 points. The SMMT says that while flexibilities in the rules - including credit trading between manufacturers - helped some brands avoid penalties, the underlying demand is not keeping pace with the regulatory trajectory.
UK "out of step" as EU softens 2035 target
The pressure on UK policy has intensified since December, when the European Commission proposed diluting its own 2035 zero-emission target. Rather than requiring 100% of new car sales to be zero-emission, the EU now proposes a 90% emissions reduction, with the remaining 10% offset through green steel or synthetic fuels.
Stellantis UK managing director Eurig Druce told the BBC that the UK was "increasingly out of step with the position in Europe and the rest of the world" and called for the ZEV mandate review to be brought forward to early 2026.
Industry critics argue that without alignment, UK manufacturers face higher compliance costs than their European counterparts - while selling into a market that represents just 2% of global vehicle sales.
Mixed signals from government
The government has introduced support measures for EV buyers, including the Electric Car Grant scheme, which offers up to £3,750 towards eligible vehicles. However, the SMMT notes that only around a quarter of EV models currently qualify.
Meanwhile, the autumn Budget announced plans for a per-mile road charge on electric vehicles from 2028 - 3p per mile for EVs, 1.5p for plug-in hybrids - to offset declining fuel duty revenues.
The Office for Budget Responsibility estimates the incentives could generate around 320,000 additional EV sales over five years, but the new tax would reduce sales by 440,000 - a net loss of 120,000 vehicles.
"Even the announcement of a tax specifically on EVs will send a very conflicting message to consumers," Hawes said.
Transport minister Keir Mather defended the government's approach, saying investment was "driving EV uptake, with sales up nearly 24% on the year".
Colin Walker of the Energy and Climate Intelligence Unit offered a more positive view of the figures, arguing the mandate was working: "2025 has been another bumper year for EV sales, with nearly one in four cars sold being an EV."
