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The UK is competing with Germany to be Europe’s biggest market for electric vehicles by 2024 after carmakers spent around £4.5 billion in rebates to encourage the switch from internal combustion cars.
EVs accounted for 19.6 per cent of new cars sold in the UK last year, according to figures from the Association of Motor Manufacturers and Traders. This is higher than the 16.5 percent seen by 2023, but still well below the 22 percent target required by the UK’s electric vehicle quota scheme.
The total number of electric vehicles sold in the UK rose by 21 per cent to a record 382,000 for the year, which is higher than 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. An annual sales figure is expected to be released later this month.
“We’re going to compete for first place,” said SMMT boss Mike Hawes. “It will be a touch and go between the two markets.”
The share of UK electric vehicle sales reached 31 per cent in December, which is often a quiet month for car transactions where last-minute EV deliveries can boost their market position.
Despite strong sales growth, Hawes warned that retail demand for electric vehicles remained sluggish, with only one in 10 private consumers opting for an electric model. This has forced many carmakers to offer incentives to persuade consumers to buy electric vehicles as they try 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 percentage rising each year from 22 percent in 2024 to 28 percent this year, reaching 80 percent in 2030 .Companies face fines of up to £15,000 for each lost vehicle.
“I would like to give a very positive report that this was a record year for sales of zero-emission vehicles. But when you set a goal and you don’t achieve it, then that’s seen as a failure,” said Hawes.
While the SMMT calculated that carmakers will have to spend £1.8 billion to buy credits to avoid fines for the past year, the Department for Transport said it was “confident” that flexibility in the current scheme meant none of them would face financial penalties for 2024.
The ZEV mandate – which was drawn up by the previous Tory government when sales were expected to rise sharply – has been sharply criticized by 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 launched a consultation on the scheme.
The consultation will examine 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 on track to meet the targets warn that more incentives are needed to help the industry meet ever-increasing targets later in the decade.
Although anyone who buys an EV through a company car scheme can get generous tax treatment, the usual consumer purchase incentives were cut a few years ago, something carmakers say has made it harder to sell models that they are often still more expensive than gasoline equivalents.
Kia, which is on track to hit its targets for 2024 and 2025, warned it may still need more help later.
“The transition from 33 per cent in 2026 to 80 per cent in 2030 is a big step,” said UK leader Paul Philpott.
The brand, a subsidiary of South Korea’s Hyundai Motor, reported record sales driven by demand for its hybrids as well as fully electric models.
“A boost now would act as a really positive catalyst to build that momentum faster and make achieving the target in the coming years much more straightforward.”
The DfT said it had “invested over £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 ZEV”.
