Discounts on electric cars in the UK are being strained because industry lobbyists are saying that the current incentives will not last. Almost half a million electric vehicles were sold by 2025. However, automakers have to grapple with increased costs.
Zero-emission vehicle targets by the states are compelling manufacturers to provide high discounts and make the question of sustainability and market equilibrium.
Electric Car Sales Growth and Market Share
In the UK, it was the third year in the post-pandemic period, and 2,020,373 new cars were registered. The electric cars had a record of 473,340 and this was equivalent to a market share of 23.4. It is a higher figure than 2024. Notably, it is still lower than 28% target that the government had established under the Zero Emission Vehicles Mandate.
The requirement will ensure car manufacturers comply with electric vehicle sales requirements or penalty. Nevertheless, the concessions enable the manufacturers to minimize the emissions or to purchase credits of the overperforming firms. In April, these flexibilities were enlarged following lobbying by the industry. Nonetheless, some fines on non-compliance were decreased.
Industry Concerns Over Discounts
The Society of Motor Manufacturers and Traders approximates that in 2025 a total of more than 5 billion pounds of electric vehicle discounts had been provided. An average electric car sold at the time of sale was discounted at around 11,000 pounds.
SMMT chief executive Mike Hawes stated such discounts cannot be sustained as carmakers are working towards an even larger target of 33% in 2026. Hawes recommended the government to introduce the proposed review of the Zero Emission Vehicles Mandate that had initially been planned at 2027.
Furthermore, Hawes observed that the review also ought to take into account the increased energy and raw material prices, which impact on the production. Hawes stressed that selling these vehicles in the industry is necessary due to the high rates of investment involved, but discounts have to be in accordance with the real demand by consumers.
Calls for Policy Review
Eurig Druce, the group MD of Stellantis UK, proposed the review of the mandate be shifted to early 2026. He claimed that it would give a level of confidence to the manufacturers when making investment plans. This will enable the consumers to make wise decisions. According to Druce, the review would also align UK policies with European regulations. It would ensure the UK keeps pace with global trends.
Other commentators defend the mandate, citing the fact that almost every fourth new car sold in 2025 was electric. According to Colin Walker of the Energy and Climate Intelligence Unit, this increase would be good news in the second-hand electric vehicle market, making it more affordable.
Government Measures and Challenges
The UK government has introduced measures to support electric vehicle adoption, including the 2 billion pound Electric Car Grant Scheme. The scheme offers up to 3,750 pounds for buyers and funds charging infrastructure projects. However, a planned per-mile tax on electric vehicles could reduce sales, counteracting some incentives.
The Office for Budget Responsibility expects the incentives to generate 320,000 extra sales over five years, while the tax may cut 440,000. Transport minister Keir Mather stated government investment is increasing uptake. There are nearly half a million electric vehicles now on UK roads. He said this represents a nearly 24% rise in sales from 2024.
