Electric car sales to increase to 440,000 in 2025, but still missing UK industry target

Electric car 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 leading EV leasing company DriveElectric.

This is a 4.4% increase compared to electric car sales equating to 19.6% of the total new car market in 2024 (381,970 units) – although new electric car registrations accounted for 31.0% of the market in December 2024 as manufacturers aimed to hit the government’s Zero Emission Vehicle (ZEV) mandate target.

The continued growth in electric car sales shows that more and more motorists are embracing EVs, but the forecast of electric cars 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. Good news includes that there are increasing numbers 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 have longer driving ranges and faster charging, helping to break down the barrier of range anxiety which has been cited as a blocker to adoption, and amplified by misinformation.

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.

There are still also 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% each 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 although 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, DriveElectric, comments: “We are forecasting that electric car 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, which is significant progress, but this 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 electric cars, and although EVs 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 electric vehicle 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 DriveElectric 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 to around 19%.

Although some 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 don’t 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 isn’t 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 2025.

Electric vehicles are seen as a key solution to help the UK achieve its net zero greenhouse gas targets, as well as helping with the problem of local air quality. EVs also have lower running costs than petrol and diesel vehicles, however an overwhelming factor in the rapid increase in EV adoption is that the vast majority of motorists prefer the driving experience of EVs compared to petrol and diesel cars and vans.

DriveElectric is an electric vehicle leasing company that has been helping organisations and individuals to adopt EVs to save money, lower emissions and transition to low carbon energy since 2008. DriveElectric aims to make the switch to electric cars and vans simple for business fleets, offering added benefits including monitoring and optimising emissions from charging fleet vehicles.