Electric car discounts are unsustainable, warns industry group

A major automotive group has warned that industry discounts on electric vehicles are “unsustainable” as the number of new cars registered in the UK topped two million last year for the first time since the pandemic.

Almost 500,000 new cars sold were electric, according to the Society of Motor Manufacturers and Traders (SMMT).

SMMT chief executive Mike Hawes welcomed what he called “a fairly solid result against the backdrop of tough economic and geopolitical headwinds”.

But electric vehicle sales were still not growing fast enough to meet official targets, he said, warning of a growing gap between consumer demand and government ambitions.

Discounts of thousands of dollars per vehicle were “unsustainable,” he said.

A total of 2,020,373 new vehicles were registered in 2025, the third consecutive year of growth and the highest since the pandemic.

However, this is still significantly less than the 2.3 million sold in 2019.

There were 473,340 new registrations for electric vehicles last year, giving them a market share of 23.4%.

This is a significant increase from 2024, but still below the government's main target of 28% under the so-called Zero Emission Vehicle Mandate (ZEV Mandate).

The mandate stipulates that automakers that fail to sell enough electric vehicles as a percentage of total sales could face hefty fines.

However, the rules include concessions that could allow them to avoid fines, for example by cutting emissions from other vehicles in their fleets or by buying excess “emissions credits” from manufacturers that exceed their own targets.

These “flexibilities” were extended in April after intense lobbying by some manufacturers, and penalties for non-compliance were reduced.

But Hawes warned that even so, automakers must offer huge discounts to sell enough electric models. SMMT estimates these rebates amounted to more than £5 billion last year, or around £11,000 for every electric vehicle sold.

Hawes said that's not sustainable, especially since manufacturers are expected to hit the tougher 33% target this year. He called on the government to initiate a planned review of the ZEV mandate, due in 2027.

“The number of battery electric vehicles (BEVs) being sold is increasing,” he said. “The question is, at what cost?”

Such a review should take into account factors that have changed significantly since the goals were originally planned, including marked increases in energy prices and higher raw material costs that have made life more difficult for automakers, he said.

However, he stopped short of openly calling for further easing of the rules.

“Don’t get me wrong, the industry is not changing course,” he insisted.

“It needs to sell these cars because it has invested so much in them. But you need to make sure that the market more accurately reflects the actual level of demand.”

Eurig Drews, managing director of the Stellantis group in the UK, which owns brands such as Vauxhall, Peugeot and Citroen, called for a review of the ZEV mandate to be brought forward to earlier this year as “the UK is falling further behind in Europe and the rest of the world”.

Speaking on the BBC's Today programme, he said speeding up the review would give manufacturers “confidence” when making investment decisions and would also help “consumers make the right choices about the cars they want to buy for their future”.

However, some commentators are more positive about the ZEV mandate.

Colin Walker from Energy and Climate Intelligence's environmental research group welcomed the latest filings.

“2025 was another record year for electric vehicle sales, with nearly one in four vehicles sold in 2025 being an electric vehicle,” he said.

“This policy will in turn boost the UK used market, where most of us buy our cars, easing drivers' cost-of-living concerns.”

But Ginny Buckley, chief executive of electric vehicle consumer advice website Electrifying.com, warned that many drivers still don't feel confident about the prospect of driving an electric car.

“The shift in electric vehicle sales from one in four new vehicles to one in three by the end of the year will not happen due to momentum alone. Along with growing choice of electric vehicles, buyers need reassurance, clear messaging and policy stability.”

Over the past year, the government has put forward a number of measures to support the uptake of electric vehicles.

They include £2bn Electric Vehicle Grant Schemeproviding up to £3,750 towards the purchase of an electric vehicle, as well as significant funding for charging infrastructure.

However, plans were also announced in the autumn budget introduce a per-mile tax on electric cars – a measure designed to offset part of the decline in fuel tax revenue caused by the transition to electric vehicles.

The incentives could generate about 320,000 additional electric vehicle sales over a five-year period, according to the independent Office for Budget Responsibility. But the company says the new tax will likely counteract that by reducing sales by about 440,000, for an overall reduction of 120,000.

“That’s one of the problems we see,” Hawes said.

“To make a technology shift like this happen, you need consistent, consistent and compelling messaging and support.

“Even announcing a tax on electric vehicles would send a very mixed message to consumers.”

Transport Secretary Keir Mather said government investment was “boosting the uptake of electric vehicles, with sales up almost 24% on last year, meaning one in four new cars sold is electric and there will be almost half a million new electric vehicles on UK roads from 2024.”

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