February’s car sales in the UK saw a modest 1% decline, totaling 84,054 units in registrations. This marks the fifth consecutive month of downturn for the sector, largely driven by a 4% drop in fleet registrations, which traditionally drive market growth. Despite this overall decline, both private and business buyer volumes experienced increases, with private registrations rising by 4.6%, which boosted their market share to 35.6%, and business sector registrations rising by 3.3%.
Electric Vehicle (EV) Sales Surge
The most significant growth came from the electric vehicle (EV) segment, particularly battery electric vehicles (BEVs), which saw a remarkable 42% increase, reaching 21,244 units. This surge in BEV registrations now accounts for 25.3% of the total market, up from 17.7% last year, highlighting a growing shift toward electric mobility.
This increase in BEV uptake is particularly notable given the upcoming tax changes that will introduce new financial burdens for electric car owners.
Imminent Tax Changes Impacting EV Market
According to the Society of Motor Manufacturers and Traders (SMMT), the rise in BEV registrations is likely driven by consumer anticipation of the vehicle excise duty (VED) tax changes, effective from April 1. The VED expensive car supplement (ECS), which applies to EVs priced above £40,000, will add to the cost of owning an electric vehicle. From April, all BEVs will face a £10 VED in their first year, followed by an annual charge of £195 until the sixth year, totaling £985. For higher-end models exceeding £40,000, an additional annual charge of £425 will apply during years two to six, bringing the total cost to £3,110.
Mike Hawes, SMMT Chief Executive, pointed out that while February’s overall market figures may seem subdued, the rise in EV uptake is driven by the impending fiscal changes. He added, “While the growth is encouraging, the approach to EV incentives requires a balance to avoid disincentivizing potential EV buyers with punitive measures.”
Challenges for the EV Market
Despite the growth in BEV registrations, the market faces challenges, particularly with the high average price of BEVs. In 2024, the average price of a BEV stood at £48,000, more than double the average price of the top 10 most popular cars in 2019. The increase in EV prices, coupled with stagnant consumer purchasing power, could be dampening demand and hindering broader adoption.
An analyst from WhichEV highlighted the stark price disparity, stating, “The average price of the most popular cars sold before the lockdown was just over £20,000, compared to today’s average BEV list price of £48,000. While government incentives could help, the artificially high price points for EVs are a significant barrier for many potential buyers.”
Tesla Maintains Strong Presence
Despite these challenges, Tesla continues to dominate the market, securing both the second and third spots on the list of the top 10 best-selling cars in the UK. This highlights the continued appeal of high-performance electric vehicles despite the price barriers.
Industry Support and the Path Forward
To ease the transition to electric vehicles, the auto industry committed over £4.5 billion in discounts last year. This, coupled with significant investments in vehicle development, showcases the industry’s dedication to supporting the shift toward electric mobility. However, experts note that this level of industry support may not be sustainable without regulatory adjustments.
The introduction of the Zero Emission Vehicle (ZEV) Mandate aims to provide greater market flexibility, enhance private purchase incentives, and accelerate the development of charging infrastructure. These efforts are essential for sustaining the momentum of the electric vehicle transition and ensuring a greener automotive future.
Conclusion
As the UK navigates these complex fiscal and regulatory landscapes, the focus on sustainable transport solutions continues to gain momentum. The challenge for the government, industry, and consumers remains to align strategies with affordability and environmental goals, ensuring a smooth transition to a greener automotive future.
