The UK’s automotive industry is undergoing a fundamental shift in pricing and demand, driven by the Zero Emission Vehicle (ZEV) mandate. The regulation, requiring manufacturers to increase battery electric vehicle (BEV) quotas or face punishing financial penalties, is already creating significant change within the market, says Fraser Brown of MotorVise.
The mandate is influencing price dynamics in several ways, the most obvious being the greater supply of EVs resulting in more competitive pricing, making zero emission motoring more accessible, while the corresponding reduction of the internal combustion engine will lead to higher prices.
The result? A pricing realignment that could catch dealerships off guard.
Recent data from the Society of Motor Manufacturers and Traders (SMMT) underscores the change. In February 2025, BEV registrations increased 41.7% to 21,244 units, securing a 25.3% market share compared to 17.7% in the same month the previous year.
Year-to-date, BEV registrations reached 50,878 units, marking a 41.6% increase from 35,926 units in the same period in 2024. This elevated BEVs to a 22.8% market share, up from 15.8% previously – figures which highlight that electrification is not just a trend but a reality.
In addition, the SMMT also reported that in January, UK car production slumped by 17.7%, with just 71,104 cars and 6,908 commercial vehicles built. However, BEV, plug-in hybrid, and hybrid production increased by 1.5%.
It’s a pivotal moment for the industry, yet dealerships still relying on traditional petrol and diesel sales may soon find themselves selling increasingly unaffordable vehicles while missing the lucrative BEV market.
For some time, BEV sales have been dominated by fleet purchases due to tax incentives and corporate sustainability goals. However, with the market approaching saturation, the real growth opportunity lies in engaging private consumers. Notably, 65% of private drivers could comfortably switch to a BEV based on their daily driving needs, yet many remain unengaged and unconvinced.
To effectively reach non-fleet buyers, dealerships should:
- educate consumers: address common concerns such as range anxiety and charging infrastructure availability to demonstrate how EVs can fit seamlessly into their lifestyles.
- highlight cost savings: emphasize the lower running costs of EVs, which can offset higher upfront prices over time.
- offer tailored financing options: provide flexible financing solutions to make EV ownership more accessible to a broader audience.
Those dealerships proactively adapting such strategies are likely to thrive in this quickly evolving market landscape.
A general increase in BEV registrations will translate into a larger second-hand EV market in the coming years which will provide a more affordable entry point for private buyers, increasing demand for after-sales services and maintenance support.
Beyond domestic challenges, UK car exports, particularly in the luxury sector, face potential risks. If the US government imposes tariffs on luxury vehicles, UK manufacturers like Jaguar Land Rover (JLR), Bentley, and Aston Martin, which rely heavily on American sales, could be significantly affected.
The US currently accounts for 18.6% of all UK car exports, making this a critical concern. This scenario underscores the fragility of the UK’s reliance on key export markets and the necessity for manufacturers to diversify their market focus.
The SMMT figures confirm that the transition to EVs is accelerating, driven by mandates and regulation. Those who recognise the shift early and adapt – whether dealerships, manufacturers, or policymakers – will be best positioned for success.
Fraser Brown is founder and managing director of MotorVise