The UK’s new car market returned to growth in May as demand for electric vehicles soared.

Total new car registrations last month rose 1.6% to 150,070 units, hitting the highest figure since May 2021, but still 18.3% lower than in pre-pandemic 2019 and only the second month of growth this year, according to new figures from the Society of Motor Manufacturers and Traders (SMMT).

Fleets and businesses drove the growth, up 3.7% and 14.4% respectively and responsible for 62.6% of registrations, while interest from private buyers fell for the second consecutive month, down 2.3%.

Petrol and diesel car deliveries saw double-digit declines – down 12.5% and 15.5% – but demand for the latest electrified models increased dramatically to take a combined 47.3% market share.

Uptake of hybrid electric vehicles (HEVs) grew by 6.8% to 20,351 units, while plug-in hybrid electric vehicles (PHEVs) soared by more than half (50.8%) to 17,898.

Registrations of battery electric vehicles (BEVs), meanwhile, rose by 25.8%, accounting for 21.8% of the market – but with the SMMT again warning that manufacturer discounts are supporting sales.

It’s a less rosy picture for BEV registrations year-to-date, which have only hit 20.9% market share – still seven percentage points off the 28% mandated by regulation.

The SMMT welcomed the recent revisions to the ZEV mandate but said the current market situation was “unsustainable for a sector already facing multiple cost pressures”.

It’s renewed calls for fiscal government incentives – including halving VAT on new EV purchases and removing EVs from the VED Expensive Car Supplement. The latter is reportedly being explored by the Government.

Mike Hawes, SMMT chief executive, said: “A return to growth for new car registrations in May is welcome but manufacturer discounting on new products continues to underpin the market, notably for electric vehicles. This cannot be sustained indefinitely as it undermines the ability of companies to invest in new product development – investments which are integral to the decarbonisation of all road transport. Next week’s Spending Review is the opportunity for government to double down on its commitments to net zero by driving demand through fiscal measures that boost the market and shore up our competitiveness.”

But Colin Walker, head of transport at the Energy & Climate Intelligence Unit (ECIU), said: “EV market share now sits at 21%. Suggestions that this means the car industry is falling short of its headline 28% EV sales targets are misleading. Flexibilities built into the mandate, which the industry recently pressured the Government into expanding even further, mean the industry actually needs to hit 22% EV sales this year, meaning it is well on course to comply for the second year running.”

He added: “The ZEV mandate continues to do its thing – increasing competition between manufacturers, driving down prices and driving up sales.”

Walker also said the ZEV mandate will start to fill up the second-hand market – where most sales are made – with EVs and warned that the recent changes to the mandate “threaten to undo this progress, and could instead incentivise the sale of dirtier and more expensive plug-in hybrid electric vehicles, at the expensive of EVs”.

Nick Williams, managing director of Lex Autolease, commented: “Rising EV registrations reflect growing consumer confidence – but it’s the used market that’s really powering up. With a broader range of models now available second-hand, drivers have more choice at affordable prices, making the switch to electric easier and more accessible than ever. With commitment and support from dealers, we can charge up the used market and help more drivers make the switch.”

Novuna Vehicle Solutions MD Jon Lawes said it was encouraging to see EV registrations rebounding after a tough stretch for UK carmakers and also welcomed the recent decision to scrap planning permission for EV chargers – especially for businesses.

But he added: “Let’s be clear – EV uptake is still being propped up by the industry. If government is serious about mass adoption, it needs to go further. Raising the VED threshold would be a smart, targeted step – right now, too many EVs are penalised by the luxury tax, and that’s slowing progress.”

John Cassidy, managing director of sales at Close Brothers Motor Finance, pointed to rising consumer appetite for EVs, boosted by an influx of new models coming to the market as Chinese manufacturers gain a larger market share.

“If the Government is to achieve its targets, it needs to ensure it doesn’t introduce any further measures which could deter potential EV buyers,” he remarked.

David Borland, automotive leader at EY UK & Ireland Automotive Leader, said: “Battery electric vehicle sales have represented a consistent source of growth for the sector in recent months, which continued in May with a significant 25.8% year-on-year increase, as the shift towards cleaner and greener powertrain technologies continues. However, the ZEV mandate is still the elephant in the room, with BEV market share for this year to date currently standing at 21.8%, which remains some way behind the 28% required for compliance.”

He added: “Sales of Plug-in Hybrid Electric Vehicles (PHEVs) are reportedly expected to increase significantly over the coming years following the recent softening of ZEV Mandate legislation. Indeed, PHEV sales rose once again last month with a considerable 50.8% year-on-year uptick, as they continue to represent a compelling alternative powertrain technology.”

Finally, Jamie Hamilton, automotive partner and head of electric vehicles at Deloitte, said: “Despite the growth in car sales this month, existing headwinds facing UK car manufacturers underscores the need for a robust Industrial Strategy that provides clear direction and support for the sector. This will be crucial for manufacturers to reach the ZEV target, attract investment and ensure the UK remains a competitive player in the global automotive landscape.”