UK new car market tops two million sparked by EV sales

The UK new car market grew for the third consecutive year in 2025, breaching the two million mark for the first time since the pandemic, with 2,020,520 new registrations, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT). This represents year-on-year increase of 3.5%.

Internal combustion engines (ICE) remain the largest-selling powertrain, but their dominance is narrowing, accounting for just 51.5% of the market as demand for electrified vehicles continues to rise. Almost half-a-million battery electric vehicles (BEVs) joined UK roads in 2025, with BEV registrations up 23.9% to 473,348 units, giving them a 23.4% market share. Despite this growth, the figure falls short of the Government’s Zero Emission Vehicle (ZEV) mandate target of 28%, widening the gap between ambition and demand.

December saw a strong finish, with registrations up 3.9% to 146,249 units and private buyer demand surging by 16%. BEVs accounted for 32.2% of the market in the final month — the only time the ZEV mandate target was exceeded during the year.

Hybrid electric vehicles rose by 7.2% to secure a 13.9% share, while plug-in hybrids were the fastest-growing powertrain, up 34.7% to 11.1% of registrations. Manufacturers have invested heavily, offering more than 160 BEV models — up from 130 at the start of the year — with at least 60 more expected in 2026.

EV purchase grant
However, uptake remains modest compared to the scale of investment, with manufacturers subsidising EV sales by more than £5 billion in 2025, equivalent to £11,000 per BEV registered. The return of an EV purchase grant has helped, but only a quarter of models qualify, and the announcement of a new EV tax from 2028 risks undermining consumer confidence.

Average new car CO₂ emissions fell by 10.1% to 91.8g/km, aiding compliance with environmental targets. However, the UK’s zero-emission sales requirement will rise to one in three new cars next year, making the transition even more challenging.

Mike Hawes, chief executive of SMMT, said: “The new car market finally reaching two million registrations for the first time this decade is a reasonably solid result amid tough economic and geopolitical headwinds. Rising EV uptake is an undoubted positive, but the pace is still too slow and the cost to industry too high. The Government has stepped in with the Electric Car Grant, but a new EV tax, additional charges for EV drivers in London and costly public charging send mixed signals.

“Given developments abroad, Government should bring forward its review and act urgently to deliver a vibrant market, a sustainable industry, and an investment proposition that keeps the UK at the forefront of global competition.”