UK BEV Sales Increase 41% in January, Still Fall Short of Government Mandate

UK BEV

EV Market Struggles to Meet Zero-Emissions Vehicle Mandate as New Tax Threatens Growth

Battery Electric Vehicle (BEV) sales in the UK saw a significant increase of 41% in January 2025, reaching 29,634 units. Despite this growth, the sales still failed to meet the government's mandated market share of 28%, according to data from the Society of Motor Manufacturers and Traders (SMMT).

In terms of market share, BEVs accounted for 21.3% of UK vehicle sales in January 2025, up from 14.7% in January 2024, based on figures from clean energy group New Automotive. While this shows a positive trend, the 21.3% market share is still below last year’s target of 22% and this year's ambitious 28% goal set by the UK government as part of the zero-emissions vehicles mandate, effective since 2024. This mandate is part of the UK’s broader efforts to reduce vehicle emissions and combat climate change.

Government Incentives Fall Short Amid New Tax Challenges

Despite a £4.5bn ($5.6bn) investment by UK automakers in new electric vehicle models and consumer discounts in 2024, demand for BEVs is still tepid. Consumers continue to seek more government incentives to switch to electric vehicles, the SMMT reports.

The situation has become more challenging with the introduction of the UK vehicle excise duty (VED) for BEVs from 1 April 2025. EVs priced above £40,000 will now incur a £3,100 tax over the first six years of ownership, a sharp contrast to the previous zero-tax policy. Despite a reduction in EV prices since the £40,000 threshold was set eight years ago, many electric vehicles still fall into the luxury category and remain priced above this limit.

The SMMT has voiced concerns that this new tax will dissuade potential EV buyers, calling for a revision or cancellation of the duty. “Rather than penalizing EV buyers, we should be taking every step to encourage more drivers to make the switch, helping meet government, industry, and societal climate change goals,” said a spokesperson from SMMT.

The EV Premium Continues to Shrink

One encouraging sign for the industry is that the price premium of electric vehicles over traditional internal combustion engine models has decreased significantly. As of December 2024, the EV premium dropped to 25%, compared to 73% in January 2020, according to Auto Trader, an online car dealership.

The UK’s EV market remains heavily dependent on fleet sales, which made up 62.4% of total vehicle sales in January 2025, a 3.7% decrease from the previous year. Fleet sales include corporate and salary sacrifice scheme vehicles, which are significant drivers of BEV demand in the UK. In contrast, private car sales saw a minor decline of 0.5%, with BEVs representing about 22% of corporate vehicle sales in 2023, compared to just 9% of private sales.