Electric car sales to increase to 440,000 in 2025, but still miss target
• Electric car sales in the UK will increase to 440,000 in 2025, representing 24% of total new car sales of 1.84 million.
• This means that the 2025 ZEV mandate target for 28% of new car sales to be zero emission will be missed
Electric car sales in the UK will increase to 440,000 in 2025, representing 24% of 1.84 million total new car sales, according to forecasts from EV leasing company DriveElectric.
The continued growth in electric car sales shows that more and more motorists are embracing EVs, but the forecast of electric cars representing 24% of total sales this year means that the 2025 ZEV mandate target of 28% will be missed.
DriveElectric’s 2025 electric car sales forecast is informed by a number of factors. Good news includes that there are increasing numbers of new EVs coming to market in 2025, with smaller and more affordable models, including new entrants from China, as well as battery costs reducing and more EVs being offered at price parity with petrol cars.
The latest EVs have longer driving ranges and faster charging, helping to break down the barrier of range anxiety which has been cited as a blocker to adoption, and amplified by misinformation. The UK’s charging network is continuing to expand, particularly with more rapid and ultra-rapid chargers, giving consumers added confidence to switch to EVs.
There are still also significant financial incentives for businesses and fleets to transition to EVs, thanks to low benefit in kind (BIK) tax rates (2% until April 2025, then rising by 1% each year to 5% in April 2028). These low BIK rates have fuelled the increasing popularity of salary sacrifice, which can reduce the monthly cost of driving an EV by up to 40% for the employees of an organisation. Businesses will also be incentivised to electrify to enable them to report on carbon emission reductions, helping to secure existing contracts and win new business.
However although financial incentives exist to support businesses and fleets to transition to EVs, there are currently no similar measures such as grants for private motorists, which will continue to hold back retail EV sales.
DriveElectric’s forecast for 1.84 million overall car sales in the UK in 2025 is slightly lower than some other industry figures because it is expected that some manufacturers will reduce sales of petrol and diesel cars in an effort to meet the ZEV mandate targets – a development that was already evident in 2024.
Says Adam Kemp, Partnerships Director, DriveElectric:
“We are forecasting that electric car sales in 2025 will experience an increase of just over 4% compared to 2024 figures, taking them to 24% of the total new car market, which is significant progress, but this still falls short of the 2025 ZEV mandate target of 28%.
“A key factor in the shortfall is that while businesses and fleets enjoy financial incentives to make the switch to electric cars, and although EVs have lower whole life costs than petrol and diesel cars, there are currently no incentives for private motorists to purchase new EVs.”
In January 2024 DriveElectric accurately predicted that the percentage of EV sales for 2024 would be closer to 19% of the total market rather than the industry forecast of 22%, the latter being revised downwards later in the year to around 19%.
Although some manufacturers may hit or exceed the 28% ZEV mandate target for 2025 (Tesla, a company that only sells EVs, being one of the obvious winners), many manufacturers are likely to fall short of the target because they currently don’t have enough EVs in their model ranges, and demand for EVs from private motorists remains much lower than from businesses and fleets.
There are steep fines of £15,000 for each vehicle within the ZEV mandate’s 28% allocation that isn’t zero emission, but there are ways that car manufacturers can work around a shortfall in EV sales, including by the sale of low-emission petrol and diesel cars.
