The UK's new car market returned to a significant milestone in 2025, with sales growth driven by a powerful surge in demand for electric vehicles, according to new industry data.
Market Growth and Electric Vehicle Surge
Preliminary figures from the Society of Motor Manufacturers and Traders (SMMT) show that 2.02 million new cars were registered in 2025. This represents an increase of approximately 3.5% from the 1.95 million sold in 2024 and marks the industry's third consecutive year of growth.
The standout performance came from the electric vehicle sector. Registrations of pure battery electric vehicles (EVs) soared by 23.9% year-on-year, reaching 473,340 units. This gave EVs a 23.4% share of the total new car market, a significant rise from 19.6% in 2024. This volume is expected to cement the UK's position as the second-largest electric car market in Europe, behind only Germany.
Industry Challenges and Policy Concerns
Despite the positive figures, industry leaders voiced serious concerns about the sustainability of the current growth. SMMT chief executive Mike Hawes described the two-million registration mark as a "reasonably solid result" given tough economic conditions, but warned that the pace of EV transition is "still too slow and the cost to industry too high."
He revealed that manufacturers discounted new EVs by a total of £5.5 billion in the UK last year, equating to an average of over £11,000 per car sold—a situation he labelled "unsustainable." Hawes sharply criticised the government's "mixed messaging" on EVs, contrasting the electric car grant (offering up to £3,750 off) with the announcement of a new pay-per-mile tax for EVs in the November Budget.
He urged ministers to bring forward a planned review of the Zero-Emission Vehicle (ZEV) mandate from early 2027 to create a more stable environment. The mandate required at least 28% of each manufacturer's sales to be zero-emission, though analysts estimated the effective sales requirement to avoid penalties was closer to 20.4% due to credits for selling lower-emission petrol and diesel models.
Model Popularity and Future Outlook
In terms of best-sellers, the overall market was led by the Ford Puma and Kia Sportage, while the most popular pure battery EV was the Tesla Model Y. Notably, all three top models are SUVs.
Reaction from across the sector highlighted a need for clearer policy. Tanya Sinclair of Electric Vehicles UK said EVs offer "strong value for money" but called for "clearer, more consistent policy signals." Ginny Buckley of Electrifying.com argued that "education will unlock the next wave of EV buyers, not uncertainty." Ian Plummer of Autotrader suggested the UK "could be getting close to the tipping point," as nearly half of all new cars sold were electric or hybrid.
In response, Decarbonisation Minister Keir Mather pointed to a £7.5 billion government investment driving EV uptake, pledging to maintain momentum by extending the grant and supporting more public chargers.
The shift towards electrification was further underscored by the decline of traditional fuels. The market share for new petrol cars fell from 52.2% in 2024 to 46.4% last year, while diesel dropped from 6.3% to 5.1%. Non-plug-in hybrids grew slightly to a 13.9% share.
The UK remains committed to outlawing sales of new petrol and diesel cars from 2030, with only zero-emission models permitted from 2035. This contrasts with the European Commission, which recently watered down its total 2035 ban to a 90% zero-emission target.
The SMMT will publish its confirmed statistics at 9am on Tuesday, 6th January 2026.
