Electric demand reaches record high in January but misses target

Sky News

05-02-2025

Demand for electric vehicles accelerated in January, with fully battery-powered cars outperforming an overall contraction in the car market that the industry blames on declining business and consumer confidence.
Battery EVs (BEVs) accounted for 21% of almost 140,000 new car registrations in January, the highest-ever share for the month and a year-on-year increase of 41.6%.
It establishes BEVs as the second-largest sector of the new car market, behind only petrol, which contracted by 15% to make up just over 50% of registrations.
In an overall market that shrank by 2.5%, diesel registrations declined to just over 6% of registrations. Hybrid electric made up 13% of the market, and plug-in hybrids 9%, underlining the consumer shift towards full or partial electric powertrains.
Despite the growth of electric sales, manufacturers continue to warn that the market will not support the growth required to hit government EV targets, and called for consumer incentives and the extension of tax breaks.
Under net-zero targets introduced by the last government, manufacturers will face fines of £15,000 per vehicle if electric vehicle sales fall short of 28% of total production this year, an increase from 22% in 2024.
The new government says it is committed to the total phase-out of new petrol and diesel car sales in 2030 but is currently reviewing the target regime to allow greater flexibility.
Manufacturers who fall short of their target can buy credits from competitors who exceed EV market share, or offset them against emission reduction elsewhere in the business.
Last year this allowed the industry to hit its 22% target despite vehicle sales of just below 20%.
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The Society for Motor Manufacturers and Traders warned that EV sales are on course to hit only 23.7% this year, and that will only be achieved through discounting that it says cost the industry £4.5bn last year.
With the market largely driven by company fleet sales, which benefit from tax breaks, the SMMT called for consumer incentives to support private purchases and urged the abandonment of plans to introduce vehicle excise duty (VED) in April.
The plans will see BEVs costing more than £40,000, currently tax-exempt, subject to the 'expensive car supplement'.
"January's figures show EV demand is growing - but not fast enough to deliver on current ambitions," said chief executive Mike Hawes.
"Affordability remains a major barrier to uptake, hence the need for compelling measures to boost demand, and not just from manufacturers.
"The application, therefore, of the 'expensive car supplement' to VED on electric vehicles is the wrong measure at the wrong time.
"Rather than penalising 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."
Thinktank the Energy and Climate Intelligence Unit hailed the figures as an encouraging start to the year, and said the British car industry was on course to hit its annual target if EV sales followed recent patterns of growth.
"It's a record-breaking January for EV sales, and the sixth month on the bounce in which more than one in five new cars sold in the UK was an EV," said transport lead Colin Walker.
"This comes on the back of the car industry as a whole successfully complying with the government's EV targets in 2024, with prices driven down as manufacturers compete for sales.
"Last January, EVs accounted for 14.7% of all cars sold, but sales grew throughout the year, allowing the industry as a whole to comply with the ZEV mandate in its first year. This has been a stronger start to the year, meaning the car industry looks even better set to hit its EV targets in their second year."