The UK automotive industry is grappling with a hard truth: current electric vehicle (EV) sales depend heavily on unsustainable discounts. Despite a 2025 record of over 2 million new car registrations – including nearly 500,000 EVs – growth is slowing, and manufacturers are resorting to significant price cuts just to meet government mandates. This situation raises questions about the long-term viability of current EV incentives and policies.
Growth Amid Policy Pressure
New car sales have risen for three consecutive years, but remain below pre-pandemic levels. While EV market share hit 23.4% in 2025, it falls short of the government’s 28% target under the Zero Emission Vehicles (ZEV) Mandate. The ZEV Mandate forces automakers to increase EV sales or face penalties, though loopholes exist to avoid fines via offsetting emissions reductions or purchasing credits.
However, the reality is that manufacturers are heavily discounting EVs – to the tune of over £5 billion in 2025, averaging £11,000 per vehicle. These cuts are unsustainable, especially as the ZEV Mandate tightens to 33% this year. Industry leaders, like Mike Hawes of the Society of Motor Manufacturers and Traders (SMMT), are calling for an early review of the mandate.
Conflicting Signals and Consumer Hesitation
The government’s approach is not without contradictions. While it offers incentives like the £2 billion Electric Car Grant Scheme, it simultaneously plans a “per mile” tax on EVs to compensate for lost fuel duty revenue. This inconsistency creates confusion and undermines consumer confidence.
Eurig Druce of Stellantis emphasizes that the UK is becoming isolated from European trends, and calls for immediate policy certainty. Ginny Buckley, from Electrifying.com, points out that many drivers remain hesitant about EVs, requiring clear messaging and stable policies to drive adoption.
The Cost of Transition
The situation highlights a broader challenge: the economic strain of transitioning to EVs. Rising energy prices and raw material costs are squeezing manufacturers, while consumers grapple with affordability.
The SMMT warns that even with increased EV sales, the industry cannot sustain current discount levels. The question is whether the market can align with government ambitions without artificially inflated demand.
In conclusion, the push for EV adoption is currently fueled by unsustainable financial incentives. The government must address policy inconsistencies and ensure a long-term strategy that balances environmental goals with economic realities to avoid undermining the transition.
