The Zero Emissions Vehicle (ZEV) mandate remains the biggest risk to future electric vehicle (EV) residual values (RV), according to new used car market analysis from Indicata.
In its first Market Watch report of 2026, Indicata said the UK regulatory framework, and the ZEV mandate in particular, is continuing to destabilise used EV values, with the market shaped more by supply than demand.
Indicata data shows rising volumes of ex-fleet EVs are gradually translating into oversupply in the used market.
During the final quarter of 2025 and January 2026, used EV market share remained static at 6.8%, while stock levels rose to 8%.
While used EV prices have remained broadly flat for the past four months, Indicata said the wider used car market is finely balanced.
Fleet vendors are holding back volumes to avoid overwhelming demand, but Market Days’ Supply increased sharply from 42 days in October to 57 days in early January.
Managing EV impact on used market
Dean Merritt, UK head of sales at Indicata, said: “The UK used car market is no longer about accelerating electrification, but about managing its impact on the used market.
“While ICE vehicles continue to provide stability and anchor the liquidity of the UK used car market, we are waiting for lower used EV prices to translate into a decisive breakthrough in consumer demand.
“There remains a strong argument that unstable used values could slow overall EV adoption and it’s too early to tell whether cheaper new EVs being sold will translate into strengthening the second-hand market as only small numbers have reached auction.”
Indicata said falling EV prices have yet to stimulate a meaningful increase in used EV demand, despite OEMs being forced to grow new car EV sales to meet regulatory targets.
New EVs achieved a 23.4% market share in 2025, short of the 28% ZEV mandate target for the year. The mandate requirement has since risen to 33% for 2026.
Used EV values on a ‘knife edge’
Indicata has joined calls from the Society of Motor Manufacturers and Traders (SMMT) for the Government to bring forward its review of the ZEV mandate, warning that used EV values are on a knife edge.
The SMMT has previously said that discounting by manufacturers to meet ZEV targets equated to an average of around £11,000 per EV, risking further erosion of RVs.
Merritt added: “The SMMT claims that discounting EVs has cost OEMs a total of £5 billion, but if this continues and the used market takes another dive it will further impact all those companies that underwrite used values.
“Retail prices of used EVs have already fallen by 20% since January 2024 and the industry cannot afford a similar fall without compromising vendor profitability and driving higher monthly leasing and finance rates.”