Fleet and overall UK new car registrations fell in 2022, but EVs surpassed diesel for the first time to become second only to petrol.

Battery electric vehicle registrations surpassed diesel for the first time to become the second most popular powertrain after petrol

New figures from the Society of Motor Manufacturers and Traders (SMMT) show total registrations for the year fell 2.0% to 1.61 million, despite underlying demand, as the semiconductor shortage continued to cause supply challenges.

The fall left the market some 700,000 units below pre-Covid levels and came despite a second-half rally – December marked the fifth consecutive month of growth, with an 18.3% increase to reach 128,462 new registrations. But the UK did reclaim its position as Europe’s second biggest market across the year.

Registrations by larger fleets were particularly hard hit in 2022, due to carmakers prioritising more profitable sales to private buyers. As a result, the fleet sector was down 7.5% to 750,839 units, accounting for less than half (46.5%) of the market. Private registrations, in contrast, were up 2.0% to 818,509 units (50.7% market share) while ‘business’ registrations to companies with fewer than 25 vehicles were up 37.0% to 44,715 (2.8% share).

The December figures however again showed the changing situation, with fleet up 42.9%, business up 98.1% and private registrations dipping 7.4% – as consumer confidence was hit. And looking ahead, the SMMT said supply chains are beginning to stabilise, although erratic supply will likely impact manufacturing throughout 2023.

Electric vehicles were a clear winner of the semiconductor shortage in 2022; constrained supply saw many manufacturers prioritise deliveries of battery electric vehicles (BEVs) and hybrids.

BEVs soared 52.6% in December, claiming their largest-ever monthly market share of 32.9%. For 2022 as a whole, they rocketed 40.1% and took a 16.6% share of registrations, surpassing diesel for the first time to become the second most popular powertrain after petrol.

Plug-in hybrids rose 0.4% in December but fell 11.5% over 2022, dropping their annual share to 6.3% from 7.0% in 2021. However, the combined figure with BEVs means plug-in vehicles accounted for 22.9% of new registrations in 2022 – a record high, although a smaller increase in overall market share than recorded in previous years

Hybrid electric vehicles (HEVs) also enjoyed growth, up 58.1% in December and 27.6% across 2022, rising to an 11.6% market share for the year.

As a result, average new car CO2 fell yet again – down 6.9% to 111.4g/km; the lowest in history.

The SMMT also noted the importance of fleet and business buyers in the shift to low- and zero-emission cars; the two sectors were responsible for the lion’s share of battery electric vehicles, accounting for two-thirds (66.7%) of all BEV registrations and 74.7% of the volume gain in 2022.

But the industry body warned that climate change targets meant further action was needed to encourage more private buyers to go electric – and it’s called for broader policies to encourage uptake of zero emission-capable vehicles during 2023. The SMMT cautioned that plans to introduce VED on BEVs from 2025 with the same ‘premium’ threshold as internal combustion-engine cars will “disproportionately penalise those moving to electric”.

It’s also highlighted that public charge point provision remains a barrier to EV uptake – and that installation rates are falling below the totals required to meet the Government’s planned 10-fold increase by 2030.

The SMMT also stressed that the Zero Emission Vehicle Mandate due to be implemented from 2024 (but still not announced in detail) meant accelerated investment in charging infrastructure was needed for consumers to be confident they can make the switch and for car brands to “have a chance of securing sufficient supply to support UK market growth and not lose out to other markets which are investing more rapidly”.

Mike Hawes, SMMT chief executive, commented: “Manufacturers’ innovation and commitment have helped EVs become the second most popular car type. However, for a nation aiming for electric mobility leadership, that must be matched with policies and investment that remove consumer uncertainty over switching, not least over where drivers can charge their vehicles.”

Practicality of EV switch still not viable for all

Jamie Hamilton, automotive partner and head of electric vehicles at Deloitte, agreed that for battery electric vehicles to become truly mainstream, there was still a way to go for charging infrastructure to keep up with demand.

“Whilst moves are being made to do so, the charging infrastructure in the UK is fragmented and can be complicated to access. For example, EVs drivers will often have multiple payment accounts – one for each charge point provider – so simplifying this to a single point of contact will be key.

“In terms of charge point volumes, it will be important to create charging accessibility parity between those drivers with a driveway, and those without. At that point, the practicality of switching to fully electric becomes a viable option for all.”

Meanwhile, the RAC expressed concerns that rapid and ultra-rapid charging infrastructure is not keeping up with demand.

Electric vehicle spokesman Simon Williams said: “Recent images of queues over the festive period at public charging stations could come back to haunt ministers if this ends up stifling demand because of perceived problems with the network. Slashing VAT on public charge points from 20% to 5% to match the amount levied on domestic electricity would also give the network a shot in the arm in the face of rising electricity costs and would encourage operators to install more.”

And ChargePoint said that the charging experience must also be a focus alongside provision.

Tanya Sinclair, senior director, public policy – Europe, outlined: “It’s not about needing a large concentration of government-funded charging stations – we need to also consider the implementation of effortless and easy charging experiences, scalable designs, quality products and seamless service.

“The biggest single, revenue-neutral measure the government can implement today is the Zero Emission Vehicle Mandate – a year-on-year increasing EV sales target for vehicle manufacturers. Today’s figures show that EV sales are already on the rise – a ZEV mandate will ensure there is vehicle supply to support this trend, while also clarifying the future demand for chargers, for companies who are deploying the infrastructure.”

Mark Newberry, Europcar Mobility Group UK commercial director and sustainability spokesperson, also cautioned on assumptions that the EV growth trajectory would continue to accelerate.

“Recent Europcar research found that over 40% of motorists we surveyed do not agree with the end to the exemption of Vehicle Excise Duty in 2025. Combined with the cost-of-living pressures this could well dampen take-up in the near future.

“The other challenge is that there are still so many ‘unknowns’ about electric motoring for the UK motorist. What we’re seeing at Europcar is that businesses and individuals are keen to ‘try before they buy’ to really understand what electric motoring means in real world conditions. We are keen to support the transition to greener mobility and are offering a range of solutions so that motorists – and businesses – can put electric through its paces, from several days to several months.”

Energy prices remain a concern too, particularly with the Energy Price Guarantee due to rise 20% from April. Research by What Car? has shown rising energy prices have put off a third of potential buyers from choosing electric – and it says manufacturers, which have invested heavily into more electric models, cannot be left alone to help consumers make the switch.

Jim Holder, editorial director, added: “Our research in October showed the energy price cap helped a fifth of EV buyers decide to go electric, knowing their tariffs were protected. Support for the sector and electric vehicles in particular will be vital in 2023 to help the industry reach pre-pandemic levels.”