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

Battery electric vehicle (EV) registrations took a high market share in the final month of the year, accounting for 32.2 per cent of the market: the only time the ZEV mandate target of 28 per cent was exceeded in 2025.

In all, electrified vehicles narrowly missed becoming the majority of the market despite a surge during the last quarter. Hybrid electric vehicle (HEV) volumes rose by 7.2 per cent to achieve a 13.9 per cent market share, while plug-in hybrids were the fastest growing powertrain, with volumes increasing 34.7 per cent to take 11.1 per cent of registrations.

Meanwhile, almost half a million (473,348) new EVs were registered during 2025 (more than in the whole of 2021 and 2022 combined). This huge volume, which is likely to place the UK as the second biggest EV market in Europe by volume, saw EV market share rise to reach 23.4 per cent, but with a mandate target of 28 per cent the gap between demand and ambition is increasing rather than diminishing.

The long-awaited return of a grant for EV purchase has helped, although only around a quarter of models are currently eligible for the incentive at any level. It is manufacturers, therefore, that continue to shoulder the burden of driving up demand, subsidising their sale by more than £5bn in 2025, equivalent to £11,000 per EV registered. SMMT has declared that “such subsidies are clearly unsustainable”. Furthermore, the announcement of a new ‘eVED’ tax on EVs purchased from 2028 sends a confusing message to consumers, undermining rather than encouraging market confidence.

Mike Hawes, SMMT chief executive describes such issues as the new EV tax, additional charges for EV drivers in London and expensive public charging as “send mixed signals”.

While average new car CO2 has fallen by 10.1 per cent from 2024 to 91.8 g/km, which will assist some manufacturers with mandate compliance, the UK’s zero emission sales target will next year require EVs comprise one in three new car registrations. The UK already has the most ambitious transition trajectory of any major market and, with the EU’s proposal to revise its end of sale date from 2035, divergence between the UK and the much larger market on its own doorstep is broadening.

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