Electric Vehicle Surge in the UK Fueled by Government Mandates and Manufacturer Discounts

In 2024, the UK overtook Germany to become Europe’s largest electric vehicle (EV) market, with a record 381,970 battery electric vehicles (BEVs) sold, a 21.4% year-on-year increase. Hybrid and plug-in hybrid vehicle sales also saw growth, but BEVs only represented 19.6% of the total market—falling short of the 22% target set by the government. This surge was primarily driven by the implementation of stricter government mandates, particularly the Zero Emission Vehicle (ZEV) mandate, which required 22% of new car sales to be electric in 2024.

In addition to regulatory pressure, a significant factor in the increased sales was the steep discounts offered by car manufacturers. To meet these targets, companies such as BMW, Ford, and Mercedes-Benz have had to offer large price reductions, contributing to a nearly £12,000 (€14,455.62) discount per vehicle, adding up to approximately £4.5bn (€5.42bn) in total for 2024. While these discounts have contributed to higher sales figures, there are growing concerns regarding their long-term sustainability.

Concerns About Unsustainable Discounts and Weak Consumer Demand

The heavy reliance on discounts has raised alarms within the automotive industry, as manufacturers, including Stellantis and Jaguar Land Rover, fear that such strategies cannot be sustained indefinitely. Reports indicate that the bulk of these sales have been driven by fleet and company purchases, with individual consumer demand remaining relatively weak. Furthermore, manufacturers have warned that continued discounting could lead to job cuts, factory closures, and significant financial losses.

The UK government has already indicated plans to tighten emissions regulations further, with a proposal to bring forward the ban on diesel and petrol cars to 2030, five years earlier than initially planned. However, hybrid vehicles may still be exempt until 2035. While these measures aim to support the country’s net-zero goals, there is growing pressure to offer more incentives to private consumers to ensure the success of the transition.

Call for More Consumer Incentives and Regulatory Support

In a letter to the UK Chancellor, the Society of Motor Manufacturers and Traders (SMMT), along with 12 major car companies, urged for stronger consumer incentives to help drive EV adoption. They highlighted that while the ZEV mandate is effective at pushing manufacturers to meet sales targets, it fails to provide sufficient fiscal incentives to private buyers, thus hampering the potential for long-term market growth. SMMT CEO Mike Hawes stressed that despite the record EV sales, the model is unsustainable without significant consumer support.