New car registrations in the UK have recorded their second worst year since 1992 on the back of myriad challenges, but electric vehicle demand rapidly accelerated in 2021.

More new battery electric vehicles (BEVs) were registered in 2021 than over the previous five years combined

Hit by the ongoing impact of Covid and the semiconductor shortage, the new car market saw 1,647,181 units registered last year; up 1% on Covid-ravaged 2020 but 28.7% below pre-pandemic levels.

Fleet registrations fell 4.4% year-on-year to 812,029 units while ‘Business’ registrations to companies with fewer than 25 vehicles were down 4.7% to 32,648 units. But private registrations were up 7.4% to 802,504 units.

The fall comes after a particularly sombre December where registrations were down 18.2% year-on-year. Fleet was particularly hard-hit with a 40.4% fall, while Business registrations declined 13.1%. Private demand was up 19.9% though.

However, electric vehicle registrations in 2021 continued to provide more positive news. In fact, more new battery electric vehicles (BEVs) were registered last year than over 2016-2020 combined, reaching a total 190,727 units – up 76.3%. BEVs accounted for 11.6% – or one in nine – registrations last year.

Along with the 114,554 plug-in hybrids (PHEVs) registered (up 70.6%), this means 18.5% – or more than one in six – of all new cars registered in 2021 can be plugged in.

This is in addition to the 147,246 hybrid electric vehicles (HEVs) registered, which rose 34.0% and accounted for 8.9% of new car registrations. As a result, 27.5% of the total market is now electrified in some form.

The new figures from the Society of Motor Manufacturers and Traders (SMMT) also reveal that 40% of new cars available include plug-in variants.

The UK was also the second largest market by volume in Europe for both plug-in vehicles and BEVs, despite finishing 2021 as the third largest European market for new car registrations.

But when it comes to BEV market share, the UK only sits in ninth position overall, despite having one of the most ambitious EV targets of all major markets under its 2030 ICE ban.

As such, the UK car sector is continuing its calls for the extension of incentives and mandated charge point targets to accelerate consumer uptake and maintain Britain’s attractiveness against competitor markets – it’s warning that the slow pace of growth in on-street public charging could impede EV demand and undermine the UK’s attractiveness as a place to sell electric cars.

Mike Hawes, SMMT chief executive, said: “The biggest obstacle to our shared net zero ambitions is not product availability, but cost and charging infrastructure. Recent cuts to incentives and home charging grants should be reversed and we need to boost the roll-out of public on-street charging with mandated targets, providing every driver, wherever they live, with the assurance they can charge where they want and when they want.”

EV milestone must not mask challenging environment, says fleet sector

Jon Lawes, managing director, Hitachi Capital Vehicle Solutions, said the figures round off a hugely encouraging few months for the electrification of the UK’s motor industry and that demand for EVs shows no signs of slowing in 2022.

But he added: “It’s important that we don’t let this positive milestone mask the uniquely challenging environment that the industry is presently operating in. The prolonged shortage of semiconductors is bringing supply-side pressures to a breaking point, while a lack of public charging points is continuing to put the brakes on large-scale EV adoption across the UK.

“Time is ticking on the Government’s pledge to phase out the production of petrol and diesel cars by 2030. We need to see more decisive carbon-reduction initiatives if we are to have a future-proof, EV-dominated fleet ready by the next decade.”

Centrica, parent firm of British Gas – which runs one of the largest fleets in the UK and has committed to making sure these are all electric by 2025 – said rapidly expanding the UK’s charging network has to remain at the top of the industry’s New Year’s resolution list.

Lucy Simpson, head of EV propositions at Centrica, stated: “Government investment outlined in the Net Zero strategy is a positive step, but we must see further commitments to keep up with the demand from motorists.

“What’s more, 2022 must be the year we seriously discuss the growth of at-home charging. While inroads have been made to install charge points at work and leisure destinations, the roll-out of chargers closer to driver’s homes will unlock the potential for many more EVs being adopted.”

And new data from Deloitte reveals that some EV barriers do remain.

Jamie Hamilton, automotive director and head of electric vehicles at Deloitte, said: “Deloitte’s Global Automotive Consumer Survey data this week highlights that UK consumers still identify driving range, and a lack of public charging infrastructure among the main barriers to purchasing an EV.

“In reality, driving range is becoming less of an issue for EVs. Just this week we saw a number of new models and prototypes unveiled, pushing the boundaries of what a battery is capable of. However, the perceived lack of public charging infrastructure remains a potential issue, with significant investment required to avoid an imbalance whereby EVs are only a realistic option for consumers with off-street parking.

“Consumers also expressed concern over the perceived price premium attached to EVs at a time when subsidies are being reduced.”

Meryem Brassington, electrification propositions lead at Lex Autolease, also spoke out about the need for EV incentives – particularly pertinent after the Government cut the plug-in car and van grants last month.

“Accelerating electric vehicle adoption must remain at the top of the industry’s priorities if we’re serious about leading the EV charge. Continued fiscal support has been the driving factor behind increased adoption levels to date but we cannot afford to let this slip. We’ve already seen reductions to the Plug-in Car Grant and any future tax or grant changes must be gradual and proportional until we begin to see cost parity between some ICE and EV models.

“What’s more, the used car market will increasingly come into focus this year, especially as higher-carbon emitting vehicles are being phased out. Without fiscal support to encourage second-hand acquisition, growth may stall and impact the overall picture of the UKs electric car parc.”

Brighter new car outlook for 2022

Looking ahead, the SMMT’s latest new car registrations forecast for 2022 – published in October, before the rise of the Omicron variant – is for 1.96 million new car registrations.

While the semiconductor challenge is expected to persist in the first half of 2022, industry experts continue to report a more positive outlook for H2.

Sean Kemple, managing director of dealer finance firm Close Brothers Motor Finance, said: “The outlook for 2022 is overarchingly positive. When supply issues ease, the used car market will stabilise, and the new car market will be more equipped to meet strong levels of demand. The electric vehicle market share will likely continue to accelerate throughout the year as more EV models are brought to market. However, the success story of alternative fuelled vehicles (AFVs) will depend on how far the Government supports the development of infrastructure that is so desperately needed to encourage consumers towards taking the leap.

“Overall, there’s hope that as we move into the third quarter of 2022, it will be business as usual for car dealers as we finally start to see manufacturers’ conveyer belts speed up again.”