The UK’s new-car market ended 2025 strongly, with December seeing growth of 3.9%, according to the latest data from the SMMT. In total, 146,249 passenger cars were delivered to customers in the month, up by 5,463 units year on year.
December was the sixth month of improvement in the UK market. With an equal number of ups and downs, 2025 provided a mixed reception for new cars, as internal-combustion engine (ICE) popularity dropped. In addition, BEV confusion continued, while the full-hybrid (HEV) sector also slowed.
However, the overall picture of 2025 is one of positivity. For the first time since before the pandemic, the UK market achieved over two million registrations across the 12-month period. In total, 2,020,520 new cars were registered, a 3.5% improvement against 2024.
But with challenges continuing, will the country’s new-car momentum continue, or will it struggle to inspire buyers in the year ahead?
A changing landscape
While the figures are encouraging, the UK’s automotive industry was presented with a number of hurdles to overcome last year. Many of these related to electric vehicles, as the country’s government sought to push for uptake, while evening the tax balance.
The zero-emission vehicle (ZEV) mandate required a threshold of 28% of a carmaker’s fleet sold last year to be either battery-electric, or hydrogen fuel-cell based. Having come into effect in 2024, this target increases year-on-year. For 2026, the requirement increases to 33%.
Earlier in 2025, the government made amendments to the mandate, reducing the penalties for missing targets and increasing flexibilities to help reach goals. This was not enough, however, with the overall BEV market only reaching a 23.4% share of total registrations, 4.6 percentage points (pp) lower than required.
This was further away than the 2024 result, with a 19.6% share just 2.4pp away from the 22% requirement in that year. With neither 2024 nor 2025 seeing BEVs reach the required threshold, it is likely that 2026 will also miss the mark, calling the future of the legislation into question.
Incentives not incentivising
To help boost BEV uptake, a new incentives programme was launched in July, with up to £3,750 being offered against eligible models. However, many popular options did not meet requirements for the maximum discount, instead coming in at the lower band of £1,500.
It was not until late August that the first two models, the Ford Puma Gen-E and Ford E-Tourneo Courier, were announced in the top band.
Since then, just six other models, have met the requirements for the maximum discount, while 38 derivatives sit in the second band. This includes cars from Volkswagen Group, Kia, Renault Group and Stellantis.
The SMMT highlighted that there were more than 160 BEV models available at the end of 2025. Therefore, around 28.7% of BEVs on the market was eligible for the Electric Car Grant, and only around 5% with the maximum subsidies.
This meant manufacturers continued to shoulder the burden of driving up demand, especially to meet ZEV mandated targets. According to the SMMT, carmakers subsidised BEV sales themselves by more than £5 billion, equivalent to around £11,000 per BEV registered. This level of funding is unsustainable.
A future shock for BEVs?
While a push for electrification intensified last year, there were also many mixed messages.
In April, BEV models became eligible for vehicle excise duty (VED). This means that drivers will have to pay £10 for their vehicle’s first year of registration, then £195 a year after. Exemption from the Expensive Car Supplement was also scrapped, although the threshold was later raised from £40,000 to £50,000 for BEVs. This sees an additional annual tax of £425 on top of the standard rate, for five years, from the second year of registration.
In the November Budget, the UK chancellor of the exchequer announced plans for a ‘pay-per-mile’ scheme, named eVED, for BEVs and plug-in hybrids (PHEVs). This is set to come into effect in 2028, and will see all-electric models pay £0.03 per mile, while PHEVs will be charged £0.015. However, these vehicles will also be paying fuel duty, making their overall rate per mile much higher.
In addition, from the start of 2026, BEVs have been required to pay the congestion charge in London, from which they were previously exempt.
Could the 2030 ban change?
These changes come at a time when the EU is looking to push back its ban on petrol and diesel new-cars from 2035 to 2040. This move will, however, come with stricter emissions targets in that five-year period.
The UK government has signalled that it will be sticking to its plans for a new-car petrol and diesel ban from 2030, with a ZEV-only policy from 2035. Yet with a slowdown in BEV registrations, and tax changes likely to put drivers off adopting the technology, further consideration may be needed.
‘Rising EV uptake is an undoubted positive, but the pace is still too slow and the cost to industry too high. Government has stepped in with the Electric Car Grant, but a new EV tax, additional charges for EV drivers in London and costly public charging send mixed signals,’ commented SMMT chief executive Mike Hawes.
‘Given developments abroad, government should bring forward its review and act urgently to deliver a vibrant market, a sustainable industry and an investment proposition that keeps the UK at the forefront of global competition.’
Petrol and diesel struggles continue
Powertrain dynamics may have shifted in the monthly totals, but across the year, it was business as usual for ICE models. However, both petrol and diesel markets experienced declines in 2025.
Petrol deliveries were down by 8% across the 12 months, with 937,938 registrations. This was 81,190 units below its tally in 2024. The powertrain still dominated the UK new-car market, with a 46.4% share of deliveries, but this was down by 5.8pp year on year.
Diesel’s decline continued, with just 103,906 registrations, a 15.6% fall compared to the whole of 2024. In total, 19,198 fewer units were delivered to customers. The technology’s 5.1% market share was down by 1.2pp.
In December itself, petrol registrations fell by 3.1%, with 57,607 units making their way to customers. This was enough for a 39.4% market share, down 2.8pp. There was just 7.2pp between petrol and BEVs in terms of share, the closest the two powertrains have been all year.
Yet this may also have more to do with market manipulation in December 2024, than BEVs proving much more popular. In that month, carmakers likely held back petrol deliveries, to help them meet their BEV targets. This resulted in a 20.9% drop in registrations for the fuel-type, their biggest fall since June 2022.
Diesel, meanwhile, suffered a 12.5% decline in December, with 6,175 deliveries. This was good enough for a 4.2% market share, down 0.8pp.
Is ICE dominance over?
The ICE market therefore ended 2025 as the dominant force in terms of figures. In total, 1,041,844 petrol and diesel models were registered, down 8.8% year on year. The group still led the market with a 51.6% share, although this was down by 6.9pp.
Yet the ICE market seems to have finally run out of steam. It was beaten by EVs in December, as well as the total of electrified models once again. 63,782 units were registered, a 4.1% decline. This gave the powertrain group a 43.6% market share, down 3.6pp compared to the same month in 2024.
If 2026 begins as 2025 ended, the year will see a shake-up in powertrain dynamics for the UK market. ICE will no longer dominate, with both EVs and the total electrified market ahead of it.
BEV growth not on target
Despite the rollercoaster of announcements, BEVs ended 2025 with solid growth in the UK new-car market.
In total, 473,348 units were delivered to customers, a rise of 23.9% compared to the same period in 2024. This equated to an increase of 91,378 units, according to Autovista24 calculation of SMMT figures.
While the 23.4% market share was up by 3.8pp year-on-year, it was still a disappointing result considering the 28% requirement. Since the first eligible vehicles for the Electric Car Grant were announced in August, this share has increased by just 1.5pp. Yet growth slowed, dropping from 29.5% across the first eight months of 2025, to the 23.9% recorded after 12 months.
December saw an improvement of 8%, with 47,139 BEVs taking to UK roads in the month. This was enough for a 32.2% share of the total, up by 1.2pp. The share was the first time in 2025 that a monthly result was higher than the ZEV mandate target of 28%.
This was the second-consecutive month of single-digit growth, following a 3.6% rise in November.
The monthly results may be skewed, however, by a pull-forward effect from the previous year. Carmakers rushed registrations into 2024, as they sought to meet the ZEV mandate requirement of 22%. With stricter penalties for missing this target, numbers in November and December 2024 may have been inflated, making it more difficult to compete.
PHEVs stand out
In terms of growth, the best performer of 2025 was PHEVs. With a 34.7% rise across the 12-month period, 225,143 units made their way to customers. This was 57,965 more registrations than the whole of 2024.
The result meant the powertrain’s market share remained stable from November’s result at 11.1%. This was up by 2.5pp year on year, however.
In December, PHEVs again were the standout powertrain. Volumes grew by 32.9% in the month, with 16,898 units delivered. This was enough for an 11.6% share of total registrations, up 2.6pp year on year.
This growth is all the more impressive considering PHEVs are not eligible for the Electric Car Grant. Yet volumes were still some way off from BEV totals.
Combining BEVs and PHEVs, the electric vehicle (EV) market saw growth of 27.2% in 2025, with 698,491 registrations. This gave it a 34.6% share of the market, up 6.5pp.
In December, EV deliveries increased by 13.6%, with 64,037 deliveries, giving the technology a 43.8% market share. This 3.8pp increase allowed for the technology to beat internal-combustion engine registrations for the first time, albeit by just 0.2pp.
However, EVs have closed the gap from a 26.2pp difference since January, and should this continue, the UK will start 2026 with a shift in powertrain dynamics.
Hybrid growth remains slow
While EVs powered forward in 2025, the full-hybrid (HEV) market saw slower growth. Unlike other major European markets, the UK does not combine full and mild-hybrid models into one category. Instead, mild hybrids are included with their respective petrol and diesel markets.
This means that hybrid registrations are not leading the market, as they do in other countries. At the end of 2025, HEVs represented 13.9% of total registrations across the year. Volumes grew by 7.2%, with 280,185 units taking to UK roads.
This performance meant that over the 12 months of the year, HEVs were just 2.8pp ahead of PHEVs in terms of market share. This gap has narrowed slowly across the year, a trend that may continue into 2026.
In December, HEVs accounted for 18,430 registrations, up 3% year on year. This gave the powertrain a 12.6% market share, down by 0.1pp compared to the same month in 2024.
Adding HEVs to the EV total, the electrified market ended the year with 978,676 registrations, an improvement of 20.7% year on year. Their 48.4% market share was not enough to topple ICE, but was up 7.9pp.
However, electrified deliveries outperformed ICE for the fourth-consecutive month, with a 56.4% hold of total registrations in December. With an 11% jump, and 82,467 units leaving dealerships, this sets up the UK market for electrified dominance this year.
But with tax changes and confusion over the path towards electrification in the UK, this year may prove more of a rollercoaster for the country’s new-car market.
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