New car registrations in the UK rose above two million in 2025 for the first time since the pandemic, but the country’s main automotive industry body has warned that the pace of electric vehicle adoption is being driven by costly discounts that cannot be maintained.
Data released by the Society of Motor Manufacturers and Traders showed that 2,020,373 new cars were registered last year, marking a third consecutive year of growth and the highest total since Covid-19 disruptions. The figure remains below the 2.3 million cars sold in 2019.
Nearly 500,000 of those registrations were electric vehicles. A total of 473,340 battery electric cars were sold in 2025, giving them a 23.4% share of the market.
Mike Hawes, chief executive of the SMMT, described the overall performance as a reasonably solid result given economic pressures and geopolitical uncertainty. At the same time, he said electric vehicle sales were still falling short of official targets and were being supported by discounting at a level the industry cannot sustain.
Gap Between Targets And Demand
Under the government’s Zero Emission Vehicles mandate, electric cars are expected to account for 28% of new sales. The 2025 figure fell short of that threshold, despite a year-on-year increase from 2024.
The mandate allows flexibility for manufacturers that miss the target. Carmakers can avoid fines by cutting emissions elsewhere in their fleets or by buying surplus emissions credits from rivals that exceed their targets. These flexibilities were extended in April after lobbying from manufacturers, and penalties for non-compliance were reduced.
Even with those adjustments, Hawes said manufacturers were forced to offer heavy incentives to meet demand. The SMMT estimates that discounts on electric vehicles exceeded £5bn last year, averaging around £11,000 per car.
Hawes said this approach was unsustainable, particularly with the electric vehicle target rising to 33% this year. He called on the government to bring forward a planned review of the mandate, currently scheduled for 2027, to reflect changes in costs since the policy was designed.
Those changes include higher energy prices and increased raw material costs, which have added pressure on manufacturers. Hawes said the industry remains committed to selling electric vehicles but stressed the need for policy to better align with real-world demand.
Mixed Views On The Mandate
Not all observers share the industry’s concern. Colin Walker, head of transport at the Energy and Climate Intelligence Unit, said the figures showed strong momentum.
He said that nearly one in four cars sold in 2025 being electric would help expand the second-hand EV market over time, reducing costs for buyers and easing pressure on household budgets.
Government Support And Policy Signals
The government has introduced several measures to encourage electric vehicle adoption, including the £1.3bn Electric Car Grant Scheme, which offers up to £3,750 toward the purchase of an electric car, alongside funding to expand charging infrastructure.
However, the autumn budget also included plans to introduce a per-mile tax on electric vehicles to offset falling fuel duty revenues as petrol and diesel use declines.
The Office for Budget Responsibility has said the proposed tax could result in 440,000 fewer electric vehicles being sold over a five-year period.
Hawes said such measures risk sending mixed signals to consumers. He said a shift of this scale requires consistent and clear support, adding that the announcement of a specific tax on electric vehicles could deter buyers despite wider efforts to promote adoption.
Featured image credits: Wikimedia Commons
For more stories like it, click the +Follow button at the top of this page to follow us.