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The UK is competing with Germany for Europe’s biggest market for electric vehicles through 2024, after carmakers spent an estimated £4.5 billion on rebates to encourage the switch from internal combustion cars.
Electric vehicles accounted for 19.6 per cent of new cars sold in the UK last year, according to the Society of Motor Manufacturers and Traders. That’s up from the 16.5 percent seen during 2023, but still well below the 22 percent target required by the UK electric vehicle quota scheme.
The total number of electric vehicles sold in UK it rose 21 percent to a record 382,000 for the year, up from the 347,048 sold in Germany between January and November. Sales of electric vehicles in Germany fell 26 percent last year after subsidies were cut. Annual sales figures should be released later this month.
“We’re going to compete for first place,” said SMMT boss Mike Hawes. “It will be a touch between the two markets.”
The share of electric vehicle sales in the UK reached 31 percent in December, which is often a quiet month for car transactions where last-minute deliveries of electric vehicles can inflate their market position.
Despite the strong increase in sales, Hawes warned that retail demand for electric vehicles remained sluggish, with only one in 10 private consumers choosing an electric model. That has prompted many carmakers to offer incentives to persuade consumers to buy electric vehicles as they scramble to meet the government’s “zero-emission vehicle mandate.”
The current scheme requires a certain percentage of each carmaker’s annual sales to be zero-emission vehicles, with the annual percentage rising from 22 per cent in 2024 to 28 per cent this year, reaching 80 per cent in 2030. Companies face fines of £15,000 for each missed vehicle.
“I would like to give a very positive story that this was a record year for sales of zero-emission vehicles. But when you set a goal and you don’t meet it, then that’s considered a failure,” Hawes said.
While the SMMT calculated that carmakers would need to spend £1.8bn on buying credits to avoid penalties for last year, the Department for Transport said it was “confident” that flexibility in the current scheme meant none of them would face financial penalties. penalties for the year 2024.
The ZEV mandate – drawn up by the previous Conservative government when sales were expected to surge – has come under significant criticism from the industry, which has warned that pushing too fast will cost jobs.
Labor ministers are now considering easing rules to make it easier for carmakers to meet targets, and last month started counseling on the scheme.
The consultation will consider which hybrid cars can be sold alongside zero-emission models between 2030 and 2035, as well as expanding a scheme where carmakers can buy credits from rivals to meet targets.
Even automakers that are well on track to meet the targets warn that more stimulus is needed to help the industry meet ever-increasing targets later in the decade.
Although anyone buying an electric vehicle through the company car scheme can get generous tax treatment, the main incentives for consumers to buy were scrapped a few years ago, something carmakers say has made it harder to sell models that are often still more expensive than their petrol equivalents.
Kia, which is on track to meet its 2024 and 2025 targets, warned that it may still need more help later on.
“Going from 33 per cent in 2026 to 80 per cent in 2030 is a big jump,” UK boss Paul Philpott said.
The brand, a subsidiary of South Korea’s Hyundai Motor, reported record sales driven by demand for hybrids as well as all-electric models.
“A boost right now would act as a really positive catalyst to build that momentum faster and make getting to the goal in the coming years a lot easier.”
The DfT said it had “invested more than £2.3bn to support industry and consumers to switch, rolled out more than 72,000 public chargers and launched a consultation to invite the sector to shape how we achieve the transition to ZEVs”.
