New car registrations in the UK passed the two-million mark last year for the first time since the pandemic.

While they provide a welcome boost for the automotive sector, they also expose the growing strains in the country’s transition to electric vehicles.

EV discounting and Chinese competition could prove to be a fork in the road.

 

 

Accelerating sales

Figures from the Society of Motor Manufacturers and Traders (SMMT) show that 2,020,373 new cars were registered in 2025, marking the third consecutive year of growth and the strongest performance since 2019.

Even so, the total remains well below the 2.3 million vehicles sold in the final pre-pandemic year, reflecting continued pressure on household finances and ongoing economic uncertainty.

Electric vehicles (EVs) accounted for a record share of sales.

Nearly 500,000 battery electric cars were registered over the year, with 473,340 new EVs taking to the road.

That gave electric cars a 23.4% share of the market, up significantly on 2024 and confirming the rapid shift away from petrol and diesel models.

Hollow celebrations

SMMT chief executive Mike Hawes described the figures as a “reasonably solid result amid tough economic and geopolitical headwinds”, but warned that the headline growth masked serious challenges beneath the surface.

While EV sales are rising, he said they are still falling short of government targets and are being driven by heavy discounting that cannot be sustained in the long term.

Under the government’s Zero Emission Vehicles (ZEV) Mandate, electric cars are meant to account for 28% of new sales, rising to 33% this year.

Manufacturers that miss those targets can face substantial fines, though recent changes have added flexibility, allowing firms to offset shortfalls by lowering emissions elsewhere in their fleets or by buying emissions credits from rivals.

 

 

Competition

Even with those concessions, carmakers are cutting prices aggressively to stimulate demand.

The SMMT estimates industry-wide discounts on electric cars exceeded £5bn last year, equivalent to around £11,000 per vehicle.

Hawes said that while this has helped push up sales volumes, it is “unsustainable”, particularly as targets become more demanding.

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

He called on ministers to bring forward a planned review of the ZEV Mandate, arguing that higher energy prices, rising raw material costs and shifting consumer confidence have fundamentally changed the market since the policy was designed.

Some manufacturers have echoed those concerns.

Eurig Druce, UK managing director of Stellantis, which owns brands including Vauxhall and Peugeot, said the UK risked falling “out of step” with global markets unless the rules were reassessed, adding that clarity was vital for both investment decisions and consumers.

Others remain more optimistic. Colin Walker of the Energy and Climate Intelligence Unit said nearly one in four cars sold last year were electric, showing the policy was working and would eventually feed a more affordable second-hand EV market.

Plugging into the future

The government has backed the transition with measures such as the £1.3bn Electric Car Grant Scheme and expanded charging infrastructure.

However, plans announced in the autumn Budget to introduce a per-mile tax on EVs have raised concerns about mixed messages.

The Office for Budget Responsibility has warned that the move could reduce EV sales by 440,000 over five years.

For the industry, the latest figures highlight both progress and peril: strong growth in electric cars, but increasingly reliant on discounts that may not be viable as the UK pushes towards its net-zero ambitions.