British car buyers received a staggering £5.5 billion in discounts on electric vehicles last year, as manufacturers scrambled to meet strict government sales targets and avoid hefty fines.
Billions in Incentives to Drive EV Adoption
According to the Society of Motor Manufacturers and Traders (SMMT), the industry's trade body, the incentives averaged £11,000 per car. This massive financial push was deemed essential to encourage drivers to switch from traditional petrol and diesel models, despite many electric vehicles (EVs) still carrying a higher initial price tag.
The discounts were not purely altruistic. Under the UK's Zero Emission Vehicle (ZEV) mandate, manufacturers face significant penalties if they fail to sell a required percentage of zero-emission cars. For 2025, the target was set at 28% of new registrations. Companies that missed their individual targets often struck deals with rivals who had exceeded theirs to avoid financial penalties.
A Market in Transition Amid "Mixed Messaging"
The strategy saw some success. Battery electric vehicles accounted for 32.3% of all new car registrations in December 2025, the only month last year where the annual ZEV mandate was actually met. For 2026, the target rises to a more challenging 33%.
Overall, the UK's new car market grew by 3.5% in 2025, reaching 2.02 million registrations. Sales of pure battery EVs increased by 23.9% year-on-year to 473,340 units, meaning almost one in four new cars sold was electric. However, petrol and diesel models still made up just over half of all sales, though the SMMT expects them to become a minority by March 2026.
SMMT Chief Executive Mike Hawes warned that the UK government is sending "mixed messages" to consumers. He contrasted the £3,750 electric car grant with the announcement of a new pay-per-mile road tax for EVs in the November Budget. Hawes urged ministers to bring forward a planned review of the ZEV mandate from early 2027 to create a "sustainable industry."
Industry Calls for Clarity as Chinese Brands Gain Ground
Industry leaders are now hoping the Labour government will relax future targets as part of a promised review. When asked if buyers can expect more large discounts, Mike Hawes stated: "The pressure is still very much on the industry."
The market is also seeing a significant shift in brand origin. Chinese-made cars accounted for 13.5% of the UK market in 2025, with Chinese-owned brands like MG and BYD making up nearly one in ten new cars sold.
Tanya Sinclair of Electric Vehicles UK argued that EVs offer "strong value for money" but joined calls for "clearer, more consistent policy signals" to accelerate adoption. Ian Plummer from Autotrader suggested the UK "could be getting close to the tipping point on electrified vehicles," as nearly half of all new cars sold last year were electric or hybrid.
The backdrop to this push is the UK's commitment to outlaw sales of new petrol and diesel cars from 2030, with only zero-emission models permitted from 2035—a timeline recently softened by the European Commission to a 90% target for 2035.
