Zipcar leaves UK in wake of London congestion charge rise and electricity cost pressures

Zipcar, the car sharing operator, will withdraw from the UK marketplace by the end of 2025 following the implementation of a new congestion charge on electric vehicles in London and increasing operational costs. The company, controlled by US rental giant Avis, has begun redundancy consultations for its UK workforce of approximately 70 employees.

Over 650,000 members in Britain currently utilise Zipcar’s fleet of 3,000 vehicles through the app-based service. The decision to exit the UK comes as a new congestion charge of £18 for vehicles entering central London is set to take effect in January, with electric vehicles receiving a 25 percent discount. This adjustment means Zipcar drivers would incur a daily fee of £13.50 to operate electric vehicles within the congestion zone.

Cost pressures on Zipcar have mounted over the past year. The company attributes its most recent annual loss of £11.6 million in part to rising electricity and insurance prices, particularly given the increasing size of its electric fleet and the inclusion of fuel costs within rental fees. Sales fell from £51 million to £47 million, reflecting market headwinds affecting short-term vehicle hire companies with heavy electric vehicle exposure.

The newly imposed congestion charge on electric vehicles is a pivotal element in Zipcar’s UK withdrawal, alongside the forthcoming introduction of a pay-per-mile road tax for EVs from 2028. In submissions to the London Assembly, Zipcar cautioned that higher costs for operating electric vehicles, magnified by charging and regulatory changes, threaten the viability of affordable car-sharing services in the capital.

The Mayor of London’s office reaffirmed its support for car clubs in reducing private vehicle dependency, announcing that electric car clubs with dedicated parking bays inside the Congestion Charge Zone will receive a full exemption from January. Zipcar meanwhile has temporarily suspended new bookings pending the outcome of the ongoing staff consultation. Reservations beyond 31 December 2025 are not available to members.

Zipcar’s exit follows its previous retrenchment from regional markets in the UK, including Bristol, Cambridge, and Oxford, focusing solely on London in recent years. The firm, which entered the UK market in 2000 and was later acquired by Avis for $500 million, now faces an uncertain future in Britain amidst mounting regulatory and financial strain.