UK will be a priority for OEMs’ electric cars (video)

The size of the UK’s electric vehicle market means manufacturers will continue to prioritise it as a location for their latest models.

The ZEV Mandate has helped to propel the country to become the second largest electric vehicle market in Europe, trailing only Germany which is seeing BEV registrations fall.

Nevertheless, the year has been “very challenging”, according to Rachael Jones, Auto Trader director of finance.

Speaking on the final Fleet News Quarterly Market Insight of 2024, she said: “There's been softening retail demand (for electric cars) and a big increase in supply coming into market.

“But over the last few months, we've seen OEMs and retailers work really hard to drive consumer demand with ore discounting and finance offers.”

The unknown for 2025, as the ZEV Mandate targets tighten from this year’s 22% to 28% of new car registrations, will be whether brands balance out their ICE sales by restricting supply, which would impact the total size of the market.

“As the UK becomes larger, the largest brands can't walk away from this market; they won't be diverting production away into other markets,” said Jones.

“The brands will be working very hard to continue to make it work like they have done in the past few months.”

According to Auto Trader analysis, the new car market is poised to remain just under the two million car level next year, rising 2% in 2025 to around 1.98m.

However, with manufacturers and retailers facing a challenging combination of stricter regulatory targets, uncertain brand loyalty, and more marques and models than ever vying for a share of a still constrained market, a brand ‘conquest’ led approach of attracting new customers will be critical for success.  

As a result of rising new car supply and ZEV Mandate targets, exacerbated by stunted demand for electric vehicles from the retail market, 2024 saw a return to ‘push’ dynamics, with discounts rising to 9% in October, up from 7.4% 12 months earlier.  

EV market share is currently 18%, with registrations fuelled by the fleet sector, but new car prices have risen substantially over the past five years, from an average of £31,000 in 2019 to £43,000 today.

Next year will see an additional 17 automotive brands (and 81 models) vying for supremacy compared to 2019, with the likes of Changan, Chery-owned Jaecoo, BYD premium brands Yangwang and Denza, Skywell, XPeng and Stellantis joint venture Leapmotor among the expected new entrants.

Auto Trader forecasts the electric vehicle market share will rise to 23% next year, still falling short of the ZEV Mandate.

According to Auto Trader’s analysis, 2024 will mark a peak in the volume of petrol cars in the UK car parc, with its share beginning to soften from 2025 as electric supply continues to accelerate.

The number of EVs in the parc will reach 1.66m next year, which is a 33% increase on 2024 (1.25m), and equates to a 5% share.

On Auto Trader, EV stock rose 32% YoY in October, whilst petrol numbers fell 7%, marking the seventh consecutive month of decline. By 2027, there’ll be nearly a million fewer petrol cars in the parc, and with demand unlikely to wane significantly anytime soon, Auto Trader expects prices to rise, and more competition for stock.

“We don't see any indication of demand softening anytime soon,” Jones said. “There's no less cars available. So, with strong dynamics in that sense, the outlook for 2025 continues to be positive for the used car market.”