The UK new car market reached a significant milestone in 2025, with registrations exceeding two million for the first time since the pandemic began.
A total of 2,020,373 new cars were registered, marking the third consecutive year of growth.
However, the figure remains well below the 2.3m vehicles sold in 2019.
Electric vehicles (EVs) accounted for 473,340 of those registrations, representing a 23.4% market share.
While this was a notable increase from 2024, it still fell short of the Government’s 28% target under the Zero Emission Vehicles (ZEV) Mandate.
The mandate requires manufacturers to meet annual EV sales thresholds or face financial penalties.
The Society of Motor Manufacturers and Traders (SMMT) warned that the industry is relying on heavy discounts, often worth several thousand pounds per vehicle, to stimulate demand.
It described this approach as unsustainable, arguing that consumer appetite is not keeping pace with regulatory ambitions.
Although the ZEV Mandate includes flexibilities, such as emissions credit trading and fleet-wide emissions reductions, these were further relaxed in April following industry pressure.
At the same time, potential fines for non-compliance were reduced.
Government support has included a £2bn Electric Car Grant Scheme, offering up to £3,750 per vehicle, alongside continued investment in charging infrastructure.
However, plans announced in the Autumn Budget to introduce a per-mile tax on EVs risk dampening demand.
The Office for Budget Responsibility estimates incentives could add 320,000 EV sales over five years, but the new tax may reduce sales by 440,000 overall.
Transport Minister Keir Mather said Government action was driving uptake, with EV sales up nearly 24% year-over-year.
Talk to us about your finances.
