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Registrations of battery electric vehicles (BEVs) increased in January 2025 by 41.6% year on year to take a 21.3% market share – more than a fifth of new car registrations.
In comparison, petrol car registrations dropped by 15.3% to comprise just over half (50.3%) of the market, with diesel down 7.7% to claim a 6.2% share. Both hybrid electric vehicles (HEVs) and plug-in hybrids (PHEVs) recorded volume growth and saw their market shares rise to 13.2% and 9.0% respectively, according to data released today by the Society of Motor Manufacturers and Traders (SMMT).
Dan Caesar, CEO of Electric Vehicles UK praised the sales boost, adding that the UK would, if the percentage uplift was maintained over the year, already be on track for a greater than 25 per cent BEV market share. But, and as in 2024, with the best sales likely at year-end due to the ZEV mechanism, and more affordable EVs launching, we believe the 28 per cent target is achievable.”
Ben Nelmes, CEO of New AutoMotive said the growth of EVs in January was a “nice surprise” considering the start of the year normally results in slower sales. He added: “Even with all the uncertainty around the Government’s review of EV targets, electric car sales are still going up, turning the UK into Europe’s leading EV market. Ministers need to keep up the pace – any sudden changes to the rules could put the brakes on all the progress the UK has made and undermine the billions of investment in charging points and battery factories which are set to create thousands of jobs here in the UK.”
Colin Walker, Head of Transport at the Energy & Climate Intelligence Unit (ECIU), said: “It’s a record-breaking January for EV sales, and the sixth month on the bounce in which more than one in five new cars sold in the UK was an EV. This comes on the back of the car industry as a whole successfully complying with the Government’s EV targets in 2024, with prices driven down as manufacturers compete for sales.
“Last January, EVs accounted for 14.7% of all cars sold, but sales grew throughout the year, allowing the industry as a whole to comply with the ZEV mandate in its first year. This has been a stronger start to the year, meaning the car industry looks even better set to hit its EV targets in their second year.
“As prices come down, more and more British drivers are able to make the shift to cheaper and cleaner electric driving. And it doesn’t stop there – the new EVs being sold today enter the second-hand market, where most of us buy our cars, in three to four years’ time. By accelerating the growth of this market, the mandate will further assist millions more families to cut back on driving costs by going electric.
“The mandate also provides certainty for industry to continue to invest in the UK – from pouring billions into our charging network, to investing in the supply chains that will enable our car industry to make the transition to building the electric cars of the future. Make no mistake, the extent to which our car industry is able to make this transition will determine its future. Go fast, and billions more in economic output could be generated and 167,000 new jobs created. Get stuck producing the petrol and diesel vehicles that our major export markets are moving away from, and our car industry could collapse – economic output falling by 73%, and over 400,000 jobs being lost”.
When the ZEV mandate was first introduced in 2024, its EV sales target for the year was 22%. Sales in the first month of the year were 14.7%, 7.3 percentage points short of the annual target. However, sales grew as the year progressed, reaching 19.6% for the full year. Combined with extra credits earned from reductions made by reducing the CO2 emissions of the petrol and diesel cars it sold, the industry was able to meet its 22% target for the year. In 2025, the EV sales target has risen to 28%. With sales in the first month of the year at 21.3%, the industry is 6.7 percentage points short of the annual targets, meaning that it has made a stronger start to the year in terms of meeting its ZEV mandate obligations than it did in 2024. Given the extra credits it will also earn in 2025 from CO2 allowances, this suggests that the industry has every chance of repeating its success in meeting its ZEV mandate obligations.
Overall the UK new car market fell by 2.5% to 139,345 units in January, with the SMMT saying that weak consumer confidence and tough economic conditions combined to deliver the fourth consecutive month of decline.
Registrations by both fleet and private buyers were down in the month, by 3.7% and 0.5% respectively. Business registrations rose by 2.4% although, as a very small portion of the market, this translated to just 55 additional units.
The SMMT comments that despite the increase in the month, BEV market share still remains short of the 22% target set by government for last year, and even further behind the 28% requirement for 2025. This gap between demand and ambition is why the review of the Vehicle Emissions Trading Scheme and its flexibilities is essential and must deliver meaningful changes urgently, else there will likely be significant negative consequences for the market, industry and, potentially, the consumer.
Significant manufacturer investment both in new products and, last year, more than £4.5 billion worth of discounts, helped many drivers make the switch, but more consumers are still reticent, looking for greater encouragement from government and elsewhere. Private retail buyers still lack a meaningful fiscal incentive to buy an EV and, moreover, the application of the Vehicle Excise Duty ‘Expensive Car Supplement’ (ECS) to BEVs in just two months comes at the worst time for the industry. It means EV models costing more than £40,000 – the majority on the market, given higher production costs – will incur a £3,110 tax bill over the first six years of ownership – compared with zero at present. The change will impact both the new and used car markets, undermining the goal of a mass market transition. As a result, the industry is calling for tax plans to be revised to ensure the system is fair and avoids dissuading those who want to buy an EV.
Mike Hawes, SMMT Chief Executive, said: “January’s figures show EV demand is growing – but not fast enough to deliver on current ambitions. Affordability remains a major barrier to uptake, hence the need for compelling measures to boost demand, and not just from manufacturers. The application, therefore, of the ‘Expensive Car Supplement’ to VED on electric vehicles is the wrong measure at the wrong time. Rather than penalising EV buyers, we should be taking every step to encourage more drivers to make the switch, helping meet government, industry and societal climate change goals.”
“The threshold for the ECS – dubbed the ‘luxury car tax’ when launched – has remained unchanged at £40,000 since it was set eight years ago, when the overall market was 30% larger than today and BEVs barely featured. With more than twice as many BEVs registered this January than in the whole of 2017, raising the eligibility threshold for EVs – or exempting them from the ECS entirely – would send the message that EVs are essentials, not luxuries, and ensure vehicle taxation remains fair and appropriate for today’s market conditions.”
The latest market outlook anticipates the new car market declining slightly in 2025 by 0.2% to 1.95 million units, with BEV uptake rising by 20.9% to 462,000 – a 23.7% market share, but still short of the mandated 28% target for the year. The gap is anticipated to widen in 2026, when BEVs are expected to comprise 28.3% against a target of 33%. The growing disparity between market demand and regulated targets further underscores the need for substantive market incentives that match ambition.
BEVs are currently exempt from all VED. From 1 April, all BEVs will be subject to £10 VED in the first year of ownership, followed by annual VED of £195 currently in years 2-6 (£975), for a total of £985. For BEVs more than £40,000, an additional £425 is currently charged annually in years 2-6 (£2,125) on top of standard VED, to give a total of £3,110.
