Huge EV boost in July but mandate target gap remains

Britain’s new car market grew 11.7% in July to 156,571 units in its best performance since 2019, but while growth was driven by electrified vehicle uptake, with BEV registrations up 44.5%, the Society of Motor Manufacturers and Traders (SMMT) is warning the 33% mandate target is very likely to be missed.

SMMT’s data shows demand grew across all sectors, with private buyer uptake rising 12.6%, fleet deliveries up 9.5% – representing six in 10 (59.9%) registrations – and the lower-volume business segment up 61.3%.

Sales of plug-in hybrids were up 33.6% to take a 14.9% share of the market, and hybrids up 11.6% to account for 13.2%. Battery electric cars (BEVs) achieved another record volume for the month, up 44.5% to claim a 27.5% share.

The latest industry outlook now expects BEVs to reach 27.4% of a 2.18 million-strong market by year end – up from a 26.8% share in April’s outlook but still far short of the 33% mandate target.

Longer term, BEV share is expected to rise to 32.1% in 2027 against a target of 38%. SMMT says this gap is likely despite an ever-expanding number of brands and models, manufacturer subsidies, government incentives and an ongoing backdrop of high fuel prices.

The outlook reflects manufacturer views submitted prior to the end of ECG eligibility for demonstrator and courtesy cars in mid-July. Given these vehicles currently account for around 10% of BEV registrations, and around four in ten BEV registrations are delivered by ECG eligible models, the change could impact future performance.

SMMT warns that while mandate flexibilities are helping bridge some of the gap between natural demand and ambition, they do not come without cost and their value will diminish as targets accelerate.

Mike Hawes, SMMT chief executive, commented: “July’s record EV performance is a great achievement, reflecting industry’s huge investment in zero emission mobility.

But that progress cannot be sustained if manufacturers continue haemorrhaging billions in EV discounts, distorting demand to avoid even steeper penalties. The sector’s commitment to decarbonisation is not in doubt but its ability to remain viable – and attract investment for an EV future – is under intense pressure.

“A sustainable transition will not happen merely by compelling supply when underlying demand is not keeping pace despite year-on-year growth. We need urgent reform of the regulation, else Britain risks undermining its competitiveness and the jobs and livelihoods that depend on this industry.”

Commenting on the new car registrations in July Ian Plummer, chief customer office at Autotrader said:

“The new car market looks well on course for its best year since 2019 as strong competition between manufacturers helps improve affordability and pull consumers back into the market.

The Gulf conflict has focused the minds of car buyers on lower cost motoring options, so demand remains particularly strong for electrified vehicles.

“For the first time, one in every two new car enquiries on Autotrader in July went to a plug-in car, showing that they are now a mainstream choice for UK car buyers. On Autotrader our new car enquiries, a strong indicator of future orders and registrations, are up by almost a third year-on-year. That’s a positive sign, so we expect the market to maintain its momentum through the second half of the year, potentially generating double-digit growth.”