New car registrations have fallen for the second month running while EV uptake rose on the back of major discounting as the market races to meet the ZEV mandate targets.

EV uptake rose in November as manufacturers continued discounts totalling £4bn this year

Deliveries of new cars fell by 1.9% to 153,610 units in November, marking the third decline in four months, according to new figures from the Society of Motor Manufacturers and Traders (SMMT).

Registrations to larger fleets, which represent the bulk (59.9%) of the market, fell by 1.1% to 91,993 units. Demand from the smaller ‘Business’ sector – fleets with fewer than 25 vehicles – rose by 5.2% to 3,121 units. Uptake from private buyers dropped by 3.3% to 58,496 units, accounting for fewer than four in 10 (38.1%) new registrations. Registrations to private buyers have now been in decline for two years.

Despite a fallback in November, fleet sales have done all of the heavy lifting this year-to-date, with growth of 12.9%, in contrast to a 9.1% decline in retail sales and 4.2% in Business sales.

November’s powertrain data reveals that the ZEV mandate sales targets for carmakers continue to shape the new car market. Petrol and diesel both saw double-digit falls in November registrations, down 17.7% and 10.1% respectively but with petrol remaining the most popular powertrain with a 45.8% overall share. Hybrid and plug-in hybrid uptake also declined, down by 3.6% and 1.2% respectively.

Battery electric vehicle (BEV) registrations, meanwhile, rose for an eleventh successive month, up 58.4% to 38,581 units, representing 25.1% of the overall market compared to 15.6% a year ago.

With the best market share since December 2022, November is just the second month this year in which BEV uptake has reached mandated levels, albeit against the backdrop of a declining overall market.

This year’s growth cements Britain as Europe’s second biggest new BEV market by volume and closing the gap on leader Germany.

The SMMT however has warned that BEV uptake continues to be driven by heavy manufacturer discounting to achieve ZEV mandate targets. It says discounts on BEVs so far this year total £4bn, which is unsustainable and poses a risk to future consumer choice and UK economic growth.

The industry group says manufacturers are committed to the mandate’s ambition, but market demand for EVs remains weak and below the levels expected when the regulation was drawn up by the previous government. The car sector now expects the UK’s BEV market share to be 18.7% in 2024; a strong December performance could raise that to 19% but that’s still short of the 22% mandated target for the year.

According to the latest industry outlook, BEV registrations will need to grow by an additional 53% in 2025 if next year’s 28% mandated target is to be met – equivalent to 90,000 more businesses and consumers making the switch than the industry outlook expects.

Last week saw the Government commit to a fast-track review of the ZEV mandate following a backlash among carmakers.

The SMMT has said it welcomes an urgent review of market regulation and incentives to deliver successful transition. It’s calling for “material consumer support from government”, such as a return to the Plug-in Car Grant, along with workable regulation and faster deployment of affordable, accessible and reliable charging infrastructure.

The SMMT also points out that with the “right, responsive market regulation…  the UK could hold a commanding position as an exemplar global market for a rapid zero-emission transition”.

Mike Hawes, SMMT chief executive, said: “Manufacturers are investing at unprecedented levels to bring new zero-emission models to market and spending billions on compelling offers. Such incentives are unsustainable – industry cannot deliver the UK’s world-leading ambitions alone. It is right, therefore, that government urgently reviews the market regulation and the support necessary to drive it, given EV registrations need to rise by over a half next year. Ambitious regulation, a bold plan for incentives and accelerated infrastructure rollout are essential for success, else UK jobs, investment and decarbonisation will be at further risk.”

Sectors propping up transition feeling the strain

The BVRLA has warned that the sectors propping up the EV transition are feeling the strain and says government support for used EVs is overdue.

Toby Poston, BVRLA director of corporate affairs

Toby Poston, BVRLA director of corporate affairs, elaborated: “Today’s registration data shows that ZEV registrations are heading in the right direction, but the market remains imbalanced.

“Electric vehicle sales are still being propped up by unsustainable levels of discounting from OEMs and the huge depreciation being absorbed by leasing companies.

“Demand is still too fragile on the consumer side, which is a critical piece of the puzzle if the targets are to be hit year on year.”

He also warned that the new EV registrations only tell half the story.

“The used market props up the new, with massive depreciation on electric vehicles threatening to bring both to a standstill. The leasing sector accounts for roughly two in three new BEV vehicles purchased. The sector has spent an estimated £32bn on new BEVs since 2018. In return, it has been left to shoulder the cost of collapsing used BEV values and high depreciation. It cannot afford to do that indefinitely.

“A healthy new car market does not exist without a buoyant used one to absorb its supply. If the UK is to meet its mandate targets, government support for used EVs is overdue.”

Novuna Vehicle Solutions, one of the UK’s largest fleet operators, concurs that action on the ZEV mandate is essential.

Jon Lawes, managing director at Novuna Vehicle Solutions

Jon Lawes, managing director at the leasing and fleet management firm, said: “Despite EV growth last month, it is clear the ZEV mandate is not fit for purpose and will face continued difficulties as thresholds rise further in 2025.

“Industry still supports the ambition to ramp up EV adoption but there are two trade-offs the government can no longer ignore. Policymakers must either revisit the structure of quotas but accept a slower transition, or soften penalties on manufacturers but accept the need for more adoption incentives.

“The Government needs to deliver a swift conclusion to its review, introducing more fiscal support and ending any disconnect with the 2030 ICE phase-out timeline, which will otherwise continue weighing on the used-EV market.”

But Deloitte has said that ZEV mandate action won’t turn around the slump in private buyer demand.

Jamie Hamilton, automotive partner and head of electric vehicles at Deloitte, said: “A pragmatic approach to the ZEV mandate, alongside incentives for both manufacturers and consumers, will be crucial to drive electric vehicle uptake. However, key economic indicators such as consumer confidence, inflation, and interest rates will continue to play a significant role in purchasing decisions.

“We also need to be realistic – people need to be able to afford electric vehicles, have somewhere to charge them, and know the lights will stay on when they plug in. Get those basics right and we’ll see a much faster shift to a greener future.”

And EY has warned that incentivising consumers to make the switch and improving sentiment around electric vehicle infrastructure will also be a critical challenge if the UK’s transition towards cleaner and greener transport is to accelerate in line with government ambitions.

David Borland, EY’s UK&I automotive leader

David Borland, EY UK & Ireland automotive leader, added: “A current lack of EV purchase incentives and supply of finance, as well as changes in taxation that will likely impact consumers, are also among the several marked challenges the UK’s automotive industry is facing.

“Meanwhile, global challenges include restructuring and resizing needs, the slowing EV transition and the competitive rise of Chinese manufacturers.”

EY also warned of further challenges ahead for BEV uptake.

Edwin Kemp, director at EY-Parthenon Strategy, said: “Persistent BEV market challenges have prompted several major auto manufacturers to pare back their BEV production and sales targets recently, which reinforces the magnitude of the challenge facing the UK in its pursuit of a fast and effective EV transition.

“The tone of several manufacturers towards the agency model also appears to be changing, which could have a temporary disruptive effect on the routes to market for all powertrains, but particularly for BEVs given ambitious sales share targets in place.”

Philip Nothard, insight director at Cox Automotive, said: “While November’s performance supports our 2.0 million forecast for the year, it also signals the critical need for urgent government intervention. Without accelerated infrastructure rollout, robust consumer incentives, and clear market regulation, the sector risks falling short of the ambitious targets set for 2025 and beyond.”

But the Climate Group has urged the Government to hold firm on the ZEV mandate.

Dominic Phinn, head of transport at the Climate Group, said: “Today’s stats underline what companies across sectors have been saying over the past weeks and months: the UK is moving into the direction of EVs – and it needs to keep going. Businesses are switching their car fleets at scale, and that will bleed into the second-hand market. Leading companies are driving us into a zero-emission transport future and the Government needs to use that momentum to drive industrial growth and the uptake amongst consumers. That means protecting the ZEV mandate at all costs, creating new incentives for consumers, and making the UK’s charging and grid infrastructure one of its core missions. If the Prime Minister is announcing an agenda for change today, this needs to be part of it.”