The UK new car market has posted its best start to a year since pre-pandemic 2020 but battery electric cars lost market share as demand shifted to plug-in hybrids.

A total of 144,127 new cars were registered in January; up 3.4% year-on-year, according to the new figures from the Society of Motor Manufacturers and Traders (SMMT).

Growth was seen across all buyer types. Registrations by private retail buyers posted the biggest rise, rising 4.5%, while fleets increased by 1.6%. ‘Business’ registrations, referring to fleets with fewer than 25 vehicles, jumped 46.5%.

Fleets remained by far the largest source of new car registrations, accounting for 61.2% of the market.

Battery electric car (BEVs) volumes rose slightly – up just 0.1% to 29,654 units – but lost share compared with last year. The 20.6% market share was the lowest since April 2025.

But the SMMT caveated that January 2025 was a particularly strong month for EVs, explaining the modest annual increase. It added that the strong BEV performance at the end of 2025, with manufacturers pushing to meet regulatory targets, would also have affected the January market.

Plug-in hybrids (PHEVs) remained evergreen, posting the largest growth again as registrations rose 47.3% to account for 12.9% of registrations versus 9.0% a year ago. And hybrid electric vehicles saw a 4.8% increase, comprising 13.4% of the market; up slightly from 13.2%. Petrol and diesel volumes and share fell again.

The latest outlook anticipates the new car market to grow 1.4% to reach 2.048 million units in 2026, with EV share expected to rise to 28.5%. That’s a more optimistic outlook than previously published in October but the SMMT said the EV share would still be significantly short of the 33% mandated target for the year.

Mike Hawes, SMMT chief executive, said: “Britain’s new car market is building back momentum after a challenging start to the decade. It is also decarbonising more rapidly than ever and, despite a January dip in EV market share, the signs point to growth by the end of the year. The pace of the transition, however, may be slowing and is certainly behind mandated targets. With sales of new pure petrol and diesel cars planned to end in less than four years, there needs to be a comprehensive review of the transition now, to ensure ambition can match reality.”

Slower uptake on BEVs shows how quickly momentum can stall

Stakeholders across the EV spectrum stressed that the transition to electric vehicles is continuing, but said the figures show how quickly EV market share can come under pressure.

Jon Lawes, managing director at Novuna Vehicle Solutions, said stalling EV adoption was largely down to limitations in charging infrastructure.

“Mass adoption will only come when public charging is as dependable as filling up, with reliable rapid chargers beyond the big cities and fair pricing that doesn’t penalise drivers who can’t charge at home.

“Discounts can pull demand forward in the short term, but long-term growth depends on decisive action to scale a truly nationwide, publicly accessible rapid-charging network with faster delivery, clearer accountability and a better customer experience wherever you live.”

Paul Hyne, commercial director at Lex Autolease, also said public charging needs to keep traction with growing EV adoption to ensure EV momentum.

“It’s positive to see this being recognised, with carmakers calling for better access to charging and the Government committing £381m to help local authorities install charge points in areas that need them most. That kind of investment will really help build confidence among drivers.

“The used EV market remains just as important. A healthy second-hand market makes EVs more affordable and opens them up to more people. Maintaining a focus on affordability and consumer confidence will be key to ensuring the move to electric works for more drivers as the year progresses.”

Melanie Lane, chief executive at charging provider Pod, said the slower uptake on BEV registrations in January shows how quickly momentum can stall when confidence is knocked by mixed messages on policy and costs, despite growing interest and strong underlying demand.

“The Department for Transport’s recent Get That Electric Feeling campaign shows drivers can save up to £1,400 a year on fuel and running costs – but government must back these savings with stable, joined-up policy and action to lower energy costs to get back on a strong trajectory and convert interest into uptake at scale.”

And Jamie Hamilton, automotive partner and head of electric vehicles at Deloitte, said barriers remain for consumers purchasing EVs.

“More than three-quarters (79%) of UK consumers intending to acquire a battery electric or plug-in hybrid as their next vehicle expect to charge it at home, with only 12% stating they would charge it on-street or at a public charging station. This further emphasises the need for dedicated investment into charging infrastructure, most importantly for those without access to a charger at home.

“Price point also remains a key barrier to EV adoption, with almost half (45%) of consumers naming cost as one of their top concerns regarding battery electric vehicles. Our data shows that over a third of drivers intending to buy a new vehicle expect to pay between £30,000 and £50,000, which proves a challenge for those navigating a stretched budget.”

Meanwhile, Maria Bengtsson, UK & Ireland mobility leader at EY, said that the expansion of EV charging infrastructure and the higher threshold for the Expensive Car Supplement should help to drive further progress for the EV transition, countering the potential downside impact of the per-mile tax on electric vehicles announced at the Autumn Budget.

She also pointed to the latest EY UK Mobility Consumer Index – published in December – which revealed that interest in ICE vehicles could be showing signs of recovery, although the SMMT data shows petrol (-1.9%) and diesel (-8.8%) sales declined year-on-year in January.

Bengtsson commented: “This trend is broadly expected to continue throughout 2026, but the Index’s findings were a timely reminder that achieving mass adoption of EVs remains a significant challenge for the automotive industry, as the UK shifts away from the ‘early adoption’ phase.”