One in four new cars is an EV, but electric car grant chaos is holding buyers back
In a month where the UK car market experienced a slight decline, electric vehicles (EVs) bucked the trend — making up one in every four new car registrations in August. This rise in EVs highlights the growing relevance of services like Electric Vehicle and Car Repairs Essex in supporting the automotive sector. However, the broader automotive sector continues to struggle under economic pressure and uncertainty surrounding government incentives.
Car Sales Down, But EV Uptake Grows
According to the Society of Motor Manufacturers and Traders (SMMT), just under 83,000 new cars were registered last month — a 2% decrease compared with August 2024. Analysts attribute this fall to the ongoing cost-of-living crisis and hesitancy among buyers amid the delayed and erratic rollout of the Electric Car Grant (ECG).
Despite the overall dip, around 22,000 of the vehicles registered were fully electric, marking a 26.5% share of the market. This represents a 15% rise in EV registrations year-on-year and a noticeable gain in market share — up from 22.6% in August 2024 and 20.1% in 2023.
While these numbers reflect steady growth, the pace of transition to electric mobility remains underwhelming when compared to the surge in affordable EVs launched recently. Industry experts argue that the shift to zero-emission vehicles has not progressed as quickly as many had hoped.
EV Market Share Still Behind Government Targets
Year-to-date, EVs account for just 21.9% of total registrations, still significantly below the 28% target set by the UK government’s Zero Emission Vehicle (ZEV) mandate. The policy compels manufacturers to ensure a minimum percentage of their new car sales are electric — failure to comply can lead to fines of up to £12,000 per non-compliant vehicle, even after recent revisions to soften the rules.
John Cassidy, Managing Director of Sales at Close Brothers Motor Finance, said the data reveals a consumer base that’s “running on fumes.” He added, “The consistent year-on-year decline in total registrations highlights how challenging the economic climate is for motorists looking to make new purchases.”
Can the Electric Car Grant Revive the Market?
Much of the industry is now looking to the Electric Car Grant (ECG) as a potential catalyst for growth. The scheme, introduced in July, offers up to £3,750 off the cost of a new EV priced under £37,000 — although in most cases, the discount is capped at £1,500.
With eligibility for the ECG only confirmed for select models in August, analysts expect it will take another few months before its true impact is felt. Philip Nothard, Insight Director at Cox Automotive, explained: “August is traditionally a quieter month for registrations, but the fragmented and delayed announcement of which cars qualify has held back consumer confidence and purchase decisions.”
This sentiment was echoed by Jon Lawes, Managing Director at Novuna Vehicle Solutions, who criticised the rollout: “The Electric Car Grant has so far caused more confusion than confidence. Only two models currently qualify for the full £3,750 reduction, and constant last-minute rule changes have left buyers uncertain. It’s a missed opportunity at a time when both affordability and clarity are essential.”
Stock Surplus and Shifting Preferences
Supply now appears to be outstripping demand, prompting speculation that manufacturers may resort to aggressive discounting and tactical marketing to shift stock. Nothard notes that as consumer preferences increasingly tilt towards hybrid models, manufacturers will need to be cautious in managing stock levels and pricing strategy.
While the year-to-date market has risen by 2%, reaching approximately 1.265 million units, it remains 16.7% below pre-Covid levels. This underscores the long road to full recovery and the pressing need to align market supply with both consumer demand and the government’s green targets.
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