EV market continues upward trend, but trade tariffs threaten UK car manufacturers

05 February 2025

The latest SMMT new registrations data saw battery electric vehicle (BEV) registrations continue recent growth trends, with volumes up by 41.6% year-on-year in January, representing a 21.3% overall market share.

But, despite the increase, the BEV market share is still falling short of the 22% target set by government in 2024, and even further behind the 28% target set for 2025. Overall, the new car market declined by 2.5% at 139,345 units.

Sheena McGuinness, Head of Renewables and Cleantech at RSM UK, comments: “The latest data shows that the registration of new electric vehicles (EVs) is slowing down. The percentage change versus 2024 registrations is a 2.5% decrease. Both private and fleet buyers reported a slowdown, with the latter seeing a 3.4% year-on-year fall. This is the fourth consecutive month of decline and casts doubt on car manufacturers’ ability to meet the zero emission vehicle (ZEV) mandate, especially given the uplift to 28% this year. If the January registrations are anything to go by, the 2025 mandate appears to be near impossible to meet without government intervention.

“However, the intervention to date is likely to be contributing to the contraction of the market. With effect from 1 April 2025, new ZEVs registered with a list price exceeding £40,000 will trigger a five-year liability to the expensive car supplement (currently £410 per annum, so an additional cost of over £2,000). Removing some of the benefits that EV drivers currently enjoy, such as the vehicle tax exemption, further threatens affordability for many drivers when the average price point of EVs sits at £46,000 (before factoring in the additional £2,000). This may be contributing to the dwindling sales of new EVs."

She added: “The impact of Trump’s trade tariffs is yet to be reflected in EV car registrations. Even if the UK does not directly fall within the remit of the rising tariffs, the knock-on effect of his trade war on China will likely have ramifications on the UK car market. If the 10% tariff on all Chinese goods imported to the US is enacted then Chinese car manufacturers will look to other overseas markets to sell their wares if the US is no longer a viable option, which may lead to undercutting British car manufacturers. To increase the likelihood of meeting the ZEV mandates and restore the former upward trajectory on new EV registrations, it is clear that the government will need to incentivise potential buyers to make EVs a more compelling option, including the removal of infrastructure barriers to ensure all drivers have access to charging networks.”

Sheena McGuiness
Sheena McGuinness
Partner, Co-head of energy and natural resources  
Sheena McGuiness
Sheena McGuinness
Partner, Co-head of energy and natural resources