UK electric car sales surge but ZEV Mandate gap set to widen

The UK new car market grew by 5.4% in October, with battery electric vehicle (BEV) registrations rising sharply as manufacturers intensified efforts to meet government targets, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).

A total of 152,730 new cars were registered during the month, marking the 11th consecutive month of growth, although the pace of expansion slowed following September’s number-plate change.

Fleet registrations increased by 5.4% to 89,985 units, representing 58.9% of the market, while private registrations rose 4.1% to 58,229 units. Business registrations climbed 24.5% to 4,516 units.

Electrified vehicles continued to drive market growth, with BEV registrations increasing 32.7% to account for 32.0% of new car sales – their highest monthly share of the year.

Plug-in hybrid (PHEV) registrations rose 30.1%, securing a 15.0% market share, while conventional hybrid volumes declined by 5.0%. Together, electrified vehicles accounted for 59.0% of October registrations.

Despite the strong October performance, the SMMT warned that electric vehicle demand continues to fall short of the requirements set out under the government’s Zero Emission Vehicle (ZEV) Mandate.

More than 503,800 BEVs have been registered so far in 2026, an increase of 30.4% year-on-year, with electric vehicles accounting for 26.6% of the market.

However, the SMMT’s latest outlook forecasts a full-year BEV market share of 27.2%, compared with the mandated target of 33%.

The gap is expected to widen further, with BEVs forecast to account for 32% of registrations in 2027 against a 38% target, rising to 37.5% in 2028 against a mandated 52%.

Manufacturers have invested heavily in electric vehicle technology and production, including £14.3bn committed to UK EV manufacturing since 2020. More than 180 BEV models are now available to UK consumers, offering an average driving range exceeding 300 miles.

However, the SMMT said manufacturers are increasingly relying on substantial discounts, low-interest finance, deposit contributions and subsidised charging to stimulate demand, putting pressure on profitability and future investment.

Mike Hawes, Chief Executive of the SMMT, said: “Almost one in three new cars registered in October was electric – great progress in the transition, but one that comes at enormous cost.

“The industry and government are spending billions to help drivers switch, but that support cannot be sustained indefinitely with the gap to mandated targets set to more than double by 2028, just as a new EV-only tax is introduced.

“Higher targets may force supply, but they do not create demand. The ZEV Mandate review must deliver substantive reform effective immediately to ensure we have a healthy market and an attractive pitch to investors.”

The SMMT is calling for changes to the ZEV Mandate, including lower targets that better reflect consumer demand and greater flexibility for manufacturers.

The organisation also raised concerns about the introduction of electric vehicle excise duty (eVED) from 2028 and the continued disparity between VAT rates on domestic and public EV charging.

Ian Plummer, Chief Customer Officer at Autotrader, said strong demand for electrified vehicles reflected an increasingly competitive market, with consumers benefiting from manufacturers’ efforts to achieve sales targets.

“Sales of new electrified vehicles are super-charging a strong year for new car sales in a fiercely competitive market, with buyers the clear winners as the industry strives to hit sales targets,” he said.

“But the strength of electric demand in particular owes a lot to events outside the industry’s control, mainly the higher fuel prices since the Iran war began in February. That is a fragile foundation for demand if those external pressures ease, so we need more tangible measures to support it like delays to pay-per-mile electric road taxes.”

James Hosking, Managing Director of AA Cars, noted: “Eleven consecutive months of growth underline the strong momentum in the new car market, particularly given the financial pressures facing motorists.

“Manufacturers have helped sustain this growth through competitive finance offers, an expanding range of models and the arrival of new brands, giving buyers more choice than ever before.

“With the end of 2026 in sight, there are plenty of reasons to be optimistic this momentum will continue, although price remains a key consideration for buyers. With household budgets still under pressure, the challenge now is to translate this progress into sustained demand in 2027.

“Electric cars are playing an increasingly important role in the new car market. Registrations of fully electric cars rose by 32.7% in October, giving them a 32% share of the new car market.

“The Electric Car Grant, alongside increasingly competitive manufacturer offers, is helping to make the switch more attractive. But the growing interest in electric motoring isn’t limited to brand-new cars.

“Our latest quarterly Used Car Index recorded a 50% year-on-year increase in interest in used EVs, suggesting more motorists are exploring electric cars at a price they can afford.

“With a growing choice of second-hand EVs available at more accessible prices, buying used is becoming an increasingly attractive way for motorists to make the switch to electric.

“A healthy new car market also benefits second-hand buyers. Part-exchanges and former fleet vehicles help replenish used car forecourts, giving motorists greater choice across a range of budgets.”

With fleet operators accounting for nearly six in 10 new car registrations, the continued expansion of electric vehicle sales remains particularly significant for the leasing and fleet finance sectors.

However, uncertainty over future taxation, residual values and the cost of transitioning to electric vehicles could continue to influence fleet purchasing and funding decisions as manufacturers face increasingly demanding ZEV targets.