The zero-emission vehicle (ZEV) mandate is set to continue as the UK’s biggest risk to future EV residual values, according to Indicata.

In its first Market Watch used car insights report of 2026, the used vehicle intelligence firm said it believes the UK regulatory framework — and the ZEV mandate in particular — now stands as a key destabilising factor for residual values.

Indicata data shows the rise in ex-fleet EV stock is gradually translating into oversupply on the used car market, putting residual values under sustained pressure. In the last quarter of 2025 and January 2026, Indicata saw the market share of used EVs remain static at 6.8% while stock levels continued to rise to 8%.

While EV prices have remained static for the past four months, following significant falls in recent years, but the firm warns that the overall used market is finely balanced with fleet vendors cautious not to inject volumes of used vehicles faster than the market can absorb.

Market Days’ Supply (MDS) has increased dramatically from 42 days in October to 57 days in early January. MDS is derived from dividing the current supply of inventory by the average daily retail sales rate over the past 45 days.

Indicata is calling for all elements of the industry to step up EV education to grow consumer demand for used EVs.

It’s also joined the Society of Motor Manufacturers and Traders (SMMT) in urging the Government to bring forward its mandate review at a time when used EV values are on a ‘knife edge’.

“The UK used car market is no longer about accelerating electrification, but of managing its impact on the used market. While ICE vehicles continue to provide stability and anchor the liquidity of the UK used-car market, we are waiting for lower used EV prices to translate into a decisive breakthrough in consumer demand,” said Dean Merritt, Indicata UK’s head of sales.

“There remains a strong argument that unstable used values could slow overall EV adoption and it’s too early to tell whether cheaper new EVs being sold will translate into strengthening the second-hand market as only small numbers have reached auction,” he added.

SMMT data shows new EV sales achieved a market share in 2025 of 23.4% despite some aggressive marketing and pricing from OEMs, against an overall ZEV mandate target of 28%. Despite not hitting the 2025 ZEV mandate target it increased to 33% in 2026.

The SMMT claims OEM discounting for EVs to meet ZEV mandate targets equated to an average of around £11,000 per car, which risks eroding used values.

“The SMMT claims that discounting EVs has cost OEMs a total of £5bn, but if this continues and the used market takes another dive it will further impact all those companies that underwrite used values.

“Retail prices of used EVs have already fallen by 20% since January 2024 and the industry cannot afford for a similar fall without compromising vendor profitability and higher monthly leasing and finance rates,” finished Merritt.