Electric Car Discounts: A Temporary Fix in a Growing Market Crisis?

The electric vehicle (EV) market in the UK is facing a significant challenge, with industry leaders warning that the recent discounts being offered are “unsustainable.” In 2025, the number of new cars registered in the UK surpassed 2 million, a milestone not reached since the pandemic began, with nearly 500,000 of those being electric vehicles, which accounted for 23.4% of the market share. Despite these numbers, the Society of Motor Manufacturers and Traders (SMMT) chief executive, Mike Hawes, highlighted that sales are not meeting government targets, leading to a potential crisis for the industry.

The government’s ZEV Mandate aims for 28% of new vehicle sales to be electric; however, the current estimate is still falling short. Car manufacturers are under pressure, facing fines if they do not comply with sales percentages mandated by the government. To combat this, automakers have resorted to offering hefty discounts, which the SMMT estimates cost them over £5 billion last year, averaging about £11,000 per vehicle sold. Hawes cautioned that this approach is not feasible in the long run, especially as targets are set to increase to 33% for the current year.

Calls for a review of the ZEV Mandate have intensified, with some industry leaders urging for a reassessment to reflect evolving economic conditions, such as increased energy prices and raw material costs. Eurig Druce, managing director for Stellantis, argued that the UK is becoming disconnected from trends in Europe, suggesting that an expedited review would provide clarity for both manufacturers and consumers.

While some, like Colin Walker from the Energy and Climate Intelligence Unit, view the increase in EV sales positively, others like Ginny Buckley from Electrifying.com emphasize the need for consumer confidence and policy stability to continue this momentum.

The government has implemented supportive measures such as a £2 billion Electric Car Grant Scheme and significant investments in charging infrastructure. However, a new proposal for a ”per mile” tax on electric vehicles threatens to undermine these efforts by potentially reducing sales significantly, thus complicating the transition to electric as the primary vehicle choice in the UK. Transport minister Keir Mather defended the government’s investment strategy, citing an increase in EV sales as evidence of successful uptake.

Overall, the industry stands at a crossroads with the critical question of sustaining growth amidst urgent changes in policy, consumer sentiment, and market demand.