UK Car Registrations Exceed 2 Million as Electric Vehicle Sales Surge

The United Kingdom’s automotive market has broken through the 2 million annual registration barrier for the first time since the pandemic began, driven primarily by a substantial surge in electric vehicle purchases during December. The Society of Motor Manufacturers and Traders reported that total registrations reached 2.02 million for 2025, representing a year-on-year increase of 3.5 percent and signalling a tentative recovery in a sector that has endured considerable headwinds over the past decade.

The acceleration in sales momentum came predominantly in the final month of the year, when electric vehicles comprised 32.3 percent of all new car sales compared to their annual average of 23.4 percent. December’s exceptional performance reflected familiar market dynamics; manufacturers including Tesla executed substantial shipments while dealers offered aggressive discounting to meet end-of-year targets and secure sales bonuses. The 47,100 electric vehicles sold in December contributed to a full-year electric vehicle total of 473,300 units, marking an increase of nearly 24 percent compared to 2024.

The government’s zero-emission vehicle mandate, which requires manufacturers to ensure that 28 percent of their sales are all-electric models, achieved its target only in December. The regulatory requirement will intensify materially in 2026 when the threshold rises to 33 percent. Industry analysis indicates that meeting this escalated target would necessitate electric vehicle sales growth exceeding 40 percent, requiring approximately 200,000 additional sales against forecasts suggesting that total registrations will remain only marginally above 2025 levels.

The SMMT’s chief executive, Mike Hawes, cautioned that the market’s reliance on substantial discounting to drive electric vehicle adoption presents systemic challenges. Manufacturers and dealers distributed over £5 billion in discounts throughout 2025, averaging £11,000 per vehicle. This artificially stimulated demand remains unsustainable given historically elevated costs for energy and raw materials, whilst electric vehicles continue to command substantially higher prices than their petrol or diesel counterparts.

The electric vehicle industry disputes this pessimistic assessment. Fiona Howarth, founder of the electric car sourcing division of Octopus Energy, contends that expanding model availability and the confidence generated by the zero-emission vehicle mandate have created genuine market momentum. She emphasises that increased choice, enhanced charging infrastructure, and declining prices for electric vehicles position the market for sustainable growth rather than temporary discount-driven demand.

A significant structural shift has emerged in the origin of vehicles sold in Britain. Chinese manufacturers now account for 9.7 percent of new car sales, led by MG and BYD. When including vehicles manufactured in China by other brands such as Polestar and Tesla, the figure reaches 13.5 percent. Of the 473,000 new electric vehicles sold in the United Kingdom during 2025, nearly 28 percent were manufactured in China, reflecting the competitive advantages held by Chinese producers in battery technology and production efficiency.

The transformation of the British automotive market over the past decade proves dramatic. The 2025 registration figure of 2.02 million contrasts sharply with 2016’s historical peak of 2.7 million sales. Industry analysts acknowledge that the previous heights will likely never be recovered. The diesel scandal exposed systematic emissions cheating across major manufacturers and triggered stricter regulatory requirements, causing demand for diesel-powered vehicles to collapse from substantial market share to merely 5 percent in 2025. The United Kingdom’s 2016 referendum vote to leave the European Union introduced lasting uncertainty regarding tariffs and manufacturing costs, whilst the subsequent pandemic exacerbated supply chain disruptions and consumer confidence erosion.

Market structure has fundamentally altered. Extended vehicle lifespans mean consumers retain cars longer, whilst increased remote working arrangements have reduced demand for multi-car households. Critically, manufacturers have withdrawn affordable A-segment vehicles; small, economical models that generate insufficient profit margins given inflated production costs. Any meaningful recovery in British vehicle sales depends on the availability of affordable battery electric vehicles in the A-segment category, according to Hawes. The SMMT estimates a realistic steady-state market of between 2.25 million and 2.3 million annual registrations, though many industry participants question whether even this modest recovery target will materialise.