Electric vehicle (EV) sales in the UK will increase to 440,000 in 2025, representing 24% of 1.84 million total new car sales, according to forecasts from Buckinghamshire-based EV leasing company DriveElectric. This is a 4.4% increase compared to EV sales in 2024, equating to 19.6% of the total new car market last year (381,970 units) — although new EV registrations accounted for 31% of the market in December as manufacturers aimed to hit the Government’s zero-emission vehicle (ZEV) mandate target.
The continued growth in EV sales shows that more and more motorists are making the transition to electric, but the forecast of EVs representing 24% of total sales this year means that the 2025 ZEV mandate target of 28% will be missed.
DriveElectric’s 2025 electric car sales forecast is informed by a number of factors. There are an increasing number of new EVs coming to market in 2025, with smaller and more affordable models, including new entrants from China, as well as battery costs reducing and more EVs being offered at price parity with petrol cars. The latest EVs offer longer driving ranges and faster charging, helping to break down the barrier of ‘range fear’ which has been cited as a blocker to adoption. The UK’s charging network is continuing to expand, particularly with more rapid and ultra-rapid chargers, giving consumers added confidence to switch to EVs.
Furthmore, there are significant financial incentives for businesses and fleets to transition to EVs, thanks to low benefit in kind (BIK) tax rates (2%) until April 2025, then rising by 1% a year to 5% in April 2028). These low BIK rates have fuelled the increasing popularity of salary sacrifice, which can reduce the monthly cost of driving an EV by up to 40% for the employees of an organisation. Businesses will also be incentivised to electrify to enable them to report on carbon emission reductions, helping to secure existing contracts and win new business.
However, while financial incentives exist to support businesses and fleets to transition to EVs, there are currently no similar measures such as grants for private motorists, which will continue to hold back retail EV sales. DriveElectric’s forecast for 1.84 million overall car sales in the UK in 2025 is slightly lower than some other industry figures because it is expected that some manufacturers will reduce sales of petrol and diesel cars in an effort to meet the ZEV mandate targets — a development that was already evident in 2024.
Adam Kemp, partnerships director at DriveElectric, said: “We are forecasting that EV sales in 2025 will experience an increase of just over 4% compared to 2024 figures, taking them to 24% of the total new car market, and whle this is significant progress, it still falls short of the 2025 ZEV mandate target of 28%. A key factor in the shortfall is that while businesses and fleets enjoy financial incentives to make the switch to EVs, and although they have lower whole life costs than petrol and diesel cars, there are currently no incentives for private motorists to purchase new EVs.”
DriveElectric, one of the UK’s leading EV leasing companies, uses its own model built from its intelligence of the UK market to forecast registrations of battery electric cars and vans each year. In January 2024, the company accurately predicted that the percentage of EV sales for 2024 would be closer to 19% of the total market rather than the industry forecast of 22%, the latter being revised downwards later in the year.
Although some vehicle manufacturers may hit or exceed the 28% ZEV mandate target for 2025 (Tesla, a company that only sells EVs, being one of the obvious winners), many manufacturers are likely to fall short of the target because they currently do not have enough EVs in their model ranges, and demand for EVs from private motorists remains much lower than from businesses and fleets.
There are steep fines of £15,000 for each vehicle within the ZEV mandate’s 28% allocation that is not zero-emission, but there are ways that car manufacturers can work around a shortfall in EV sales, including by the sale of low-emission petrol and diesel cars, which is expected to contribute an additional 3% to the industry’s figures in 2024, so achieving the ZEV mandate target for the year. The Government is currently consulting on details around the 2030 end of sales date for petrol and diesel cars, as well as flexibilities in the ZEV mandate, a process which is due to be completed on 18 February.
