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The UK's new-car market witnessed a revival in March 2025, with a 12.4% increase in registrations compared to the same month last year. This growth ended a five-month decline in the market, as a total of 357,103 units were delivered [1].
In the midst of this growth, battery-electric vehicles (BEVs) led the market in terms of registration improvement, with a 43.2% increase. Plug-in Hybrid Electric Vehicles (PHEVs) also saw a growth of 37.9% year on year in March [1]. This surge in electric vehicles (EVs) comes as manufacturers strive to meet the increasing demands set by the updated UK Zero Emission Vehicle (ZEV) mandate.
The ZEV mandate, announced by the UK government, requires car manufacturers to ensure that 28% of new car sales in 2025 are zero-emission vehicles, with a phased increase aiming for 100% ZEV sales by 2035 [3]. To comply, manufacturers can use flexibilities such as borrowing credits from future years or earning partial credit for hybrid sales [1][2]. However, failure to meet the required ZEV sales share can lead to substantial financial penalties, with fines as high as £12,000 to £15,000 per non-compliant vehicle [2][4].
Despite intense lobbying, the government has not announced incentives for the purchase or ownership of an electric vehicle. However, the updated ZEV mandate has already prompted substantial investment in EV and battery production capacity in the UK, with over £23 billion pledged by manufacturers [1].
In March 2025, petrol cars, including mild-hybrids, continued to lead the market, but the 176,847-unit total was down 0.4% year on year [1]. Hybrid Electric Vehicles (HEVs) achieved a rise of 27.7% in March, with a 15.7% market share [1]. The all-electric technology's market share jumped by 4.2pp to 19.4% in March [1].
Looking at the first quarter, BEV registrations have increased by 42.6%, while PHEV registrations have grown by 37.9% [1]. Full hybrid and plug-in hybrid models will continue to be sold until 2035, although pure internal-combustion engine models will be banned from new car sales in 2030 [1].
Calls have been made for a reduction in VAT on public charging to benefit those without access to off-street parking [1]. From 1 April, new BEVs registered at a cost of more than £40,000 will be eligible for the Expensive Car Supplement (ECS), which has been raised by £20,000 to £60,000 [1].
In conclusion, the updated UK ZEV mandate institutes escalating ZEV sales targets starting at 28% in 2025, backed by strong financial penalties for non-compliance, which collectively place significant market and financial pressure on carmakers to accelerate electric vehicle production and sales. The government has allowed some softening of rules in response to industry concerns, but the auto industry remains under considerable regulatory pressure to transition quickly to electric vehicles.
Businesses within the automotive industry are grappling with significant market and financial pressure as the UK government's updated Zero Emission Vehicle (ZEV) mandate pushes for a 28% zero-emission vehicle sales share in 2025, escalating to 100% by 2035. In the finance sector, failure to meet the ZEV sales targets can result in substantial penalties, with fines reaching up to £15,000 per non-compliant vehicle. On the other hand, the transportation industry is witnessing a surge in electric vehicle (EV) registrations, with battery-electric vehicles leading the market in terms of growth, followed by plug-in hybrid electric vehicles. This shift towards EVs is coinciding with substantial investment in EV and battery production capacity in the UK, totalling over £23 billion, as manufacturers aim to comply with the ZEV mandate.
