(qlmbusinessnews.com . Tue 6th Jan, 2026) London, UK —
Government EV Incentives Unsustainable, Warns Leading Motoring Body
A leading motoring organisation has issued a stark warning that government incentives for electric vehicles (EVs) are not sustainable in the long-term, amidst a backdrop of surging new car registrations in the UK. Last year marked a significant milestone with over two million new cars being registered, the highest figure since the onset of the pandemic, with nearly a quarter of a million of these being electric, as revealed by the latest statistics from the Society of Motor Manufacturers and Traders (SMMT).
SMMT's Chief Executive, Mike Hawes, described the figures as a “reasonably solid result” in the face of challenging economic and geopolitical climates. Despite the positive uptake, Hawes emphasised that the growth rate of EV sales is not keeping pace with the government's set targets, highlighting an expanding disconnect between consumer demand and official aspirations. He underscored that the discounts provided on EVs, amounting to thousands per vehicle, are “unsustainable”.
The year 2025 saw 2,020,373 new cars being registered, marking the third consecutive year of growth and reaching the highest total post-pandemic. However, this figure falls short of the pre-pandemic sales in 2019, which stood at 2.3 million. EVs constituted 473,340 of the new registrations last year, capturing a market share of 23.4%, a noteworthy rise from the previous year but still not meeting the government's ambitious target of 28% under the Zero Emission Vehicles Mandate (ZEV Mandate).
The ZEV Mandate contains stringent penalties for manufacturers that fail to meet set targets for EV sales, although there are provisions within the rules allowing for certain flexibilities. Following lobbying from manufacturers, these “flexibilities” were broadened in April, and the penalties for non-compliance were reduced.
Internationally, China's BYD has surpassed Tesla as the leading EV seller. Despite these regulations, Hawes pointed out that manufacturers are being compelled to offer substantial discounts to meet the quotas, with the SMMT estimating these discounts amounted to over £5 billion last year, averaging £11,000 per EV sold. He flagged these practices as unsustainable, especially as manufacturers face a stiffer target of 33% this year, urging the government to accelerate a review of the ZEV Mandate initially scheduled for 2027.
Hawes called for the review to consider recent shifts in energy prices and raw material costs which have adversely affected the car manufacturing industry. While not explicitly asking for a relaxation of the rules, Hawes highlighted the need for market dynamics to better reflect actual demand levels.
However, there is a faction of analysts who view the ZEV Mandate positively. Colin Walker from the Energy and Climate Intelligence Unit hailed 2025 as a remarkable year for EV sales, noting that EVs now account for nearly one-fourth of all cars sold.
The government has unveiled several measures to boost EV adoption, including the £1.3 billion Electric Car Grant Scheme offering up to £3,750 off the purchase price of an EV, alongside significant investment in charging points. Despite these efforts, the recent announcement of a ‘per mile' tax on EVs, intended to compensate for lost fuel duty revenue, is projected by the independent Office for Budget Responsibility to lead to a decrease in EV sales by 440,000 units over five years.
Hawes articulated the challenge of fostering substantial technological shifts, stressing the importance of consistent, coherent, and compelling government messaging and support. The introduction of an EV-specific tax sends mixed signals to potential consumers, undermining the transition towards electric mobility.
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