UK Tesla Sales Suffer as Slowdown Hits Electric Vehicle Growth and Tax Burden Looms

The growth in sales of battery powered vehicles in the United Kingdom has eased to its weakest level for almost two years, as government plans for a pay per mile road tax on electric vehicles unsettle the market. According to analysis by the Society of Motor Manufacturers and Traders, registrations of new battery electric vehicles approached 40000 last month, a modest rise of 3.6 percent on figures from November 2024. This marks the smallest year on year increase since the supply chain disruption in December 2023. The market share for battery electric vehicles edged higher by 1.3 percent, reaching 26.4 percent for the year, which still falls short of the government target of 28 percent.

Proposals to introduce mileage based road pricing for electric vehicles come amid efforts to replace falling fuel duty revenue as more motorists abandon petrol and diesel cars. Rachel Reeves, the chancellor, confirmed that the new electric vehicle excise duty will be set at 3p per mile for battery electric vehicles and 1.5p per mile for plug in hybrids starting from April 2028. Under this policy, a typical battery electric car owner driving 8500 miles annually would face a road tax bill of £255 in the 2028 to 2029 tax year.

The SMMT has warned that the new duty risks undermining the United Kingdom’s transition to net zero and could significantly reduce consumer demand at a critical moment. The Office for Budget Responsibility forecasts that approximately 440000 fewer electric vehicles could be sold across a five year period as a result of these changes. Mike Hawes, chief executive of the SMMT, called for policies that support rather than penalise those adopting electric vehicles, noting that government and industry goals cannot be achieved without increasing demand.

The slower growth in battery electric vehicle sales is set against a broader decline in the UK new car market. Overall new registrations fell by 1.6 percent to 151154 units in November. Plug in hybrid vehicles recorded the strongest monthly growth, rising by 14.8 percent and accounting for 11.9 percent of registrations. Diesel sales fell by 24 percent, while petrol car registrations dropped by 5 percent.

Tesla suffered the sharpest blow, with UK registrations falling by nearly 20 percent month on month to 3800 vehicles, capturing just 2.5 percent of the market. By contrast, Chinese manufacturer BYD, which also markets hybrid and plug in hybrid models, saw registrations more than triple during the same period. The road pricing announcement was accompanied by an extension of grants for new electric vehicle purchases until 2030, with the latest Renault and Mini models eligible for the maximum £3750 discount.

Sector analysts have cautioned that the new mileage tax may dull cost advantages that electric vehicles have previously enjoyed, potentially slowing their uptake as the 2035 zero emission vehicle target approaches. The government and industry face a critical challenge to persuade drivers to switch to electric and to highlight the ongoing investment in cleaner transport, despite the prospect of increased running costs.