EV Discounts Unsustainable Despite 2m New Car Sales Surge, SMMT Warns

In 2025, the UK witnessed a significant surge in new car registrations, exceeding two million for the first time since the pandemic. Notably, electric vehicles (EVs) accounted for a substantial portion, with 473,340 electric cars registered, representing a market share of 23.4%. However, the Society of Motor Manufacturers and Traders (SMMT) cautioned that government discounts for EVs are becoming “unsustainable.”

Electric Vehicle Sales Overview

The total number of new cars registered in 2025 reached 2,020,373, marking the third consecutive year of growth and the highest since 2019. Despite this positive trend, sales fell short compared to the 2.3 million vehicles sold before the pandemic. The growth in electric car sales, while notable, was still beneath the government’s target of 28% under the Zero Emission Vehicles Mandate (ZEV Mandate).

Challenges Facing EV Sales

• EV sales increased by 473,340 units in 2025.
• The current market share for electric vehicles stands at 23.4%.
• Discounts amounting to over £5 billion, averaging £11,000 per vehicle, were provided for electric models.

SMMT’s chief executive, Mike Hawes, emphasized that these discounts, although helpful in boosting sales, are not a viable long-term solution. He pointed out that car manufacturers face pressures to meet rising targets, including a challenging goal of 33% electric vehicle sales in 2026. The SMMT calls for a review of the ZEV Mandate, originally scheduled for 2027, to adapt to evolving market conditions.

Government Support and Policy Measures

The UK government has introduced various initiatives to promote electric vehicle adoption, including the £1.3 billion Electric Car Grant Scheme. This initiative offers up to £3,750 towards purchasing an electric vehicle, alongside funding for charging infrastructure. However, plans for a proposed tax on electric vehicles pose potential challenges by possibly discouraging sales.

Potential Effect of New Taxation

The Office for Budget Responsibility estimates that the introduction of a ‘per mile’ tax could lead to 440,000 fewer electric cars sold over five years. Hawes expressed concern over such measures, suggesting that they send a conflicting message to consumers about the viability of transitioning to electric vehicles.

Conclusion

As the UK continues to transition towards electric vehicles, the automotive industry faces a pivotal moment. Ensuring that consumer demand aligns with government targets is crucial for sustainable growth in this sector. While the 2025 registration figures are encouraging, addressing pricing strategies and government policies will be essential in maintaining momentum in electric vehicle sales.