Electric Vehicle Market Sees Robust Growth Amid Calls for Policy Support

Recent data from the Society of Motor Manufacturers and Traders (SMMT) highlights a significant increase in electric vehicle (EV) adoption, although challenges remain in meeting governmental objectives. In May, approximately 33,000 newly registered EVs entered the market, marking a rise of 25.8% compared to figures from the previous year. Despite this upward trend, EV sales constitute only 20.9% of total new car sales in 2025, lagging behind the government's Zero Emission Vehicle Mandate target of 28%. Automakers falling short of this benchmark risk penalties or must explore alternative compliance mechanisms, such as acquiring credits from competitors.
Another segment gaining traction is plug-in hybrid vehicles (PHEVs), with registration numbers climbing by 50.8% since the previous May, reaching a total of 17,898 units sold. Although gasoline-powered cars continue to dominate the market, accounting for nearly half of all new car sales this year, their sales declined by 12.5% in May compared to the same period last year. Overall, the automotive sector witnessed a modest resurgence in May, growing by 1.6%, representing the strongest performance since 2021. However, this growth was primarily driven by fleet and business purchases, while private consumer demand experienced a decline for the second consecutive month.
The increasing popularity of electric vehicles underscores a broader societal shift toward sustainable transportation solutions. Industry leaders advocate for enhanced governmental incentives to sustain long-term growth. SMMT CEO Mike Hawes emphasized that current market momentum largely hinges on manufacturer discounts, which may not be viable over extended periods. He urged policymakers to leverage fiscal measures during the upcoming spending review to bolster consumer interest and maintain the UK’s competitive edge. Proposals include reducing VAT on new EV purchases by half, exempting EVs from additional taxation levied on expensive cars, and standardizing VAT rates for public and home charging infrastructure at 5%. Such initiatives could introduce an additional 267,000 EVs onto roads within three years, potentially cutting annual CO2 emissions by six million tonnes. Fiona Howarth, founder of Octopus Electric Vehicles, expressed optimism about the evolving market landscape, noting that innovative and cost-effective models are driving greater consumer adoption of cleaner, more affordable driving options.