Huge EV boost in July yet mandate gap persists
Britain’s new car market grew 11.7% in July with 156,571 units registered, according to the latest figures published today by the Society of Motor Manufacturers and Traders (SMMT). Although compared with a relatively weak July last year, the performance marks an eighth consecutive month of growth as the market continues its longer-term recovery towards pre-Covid levels.
Demand grew across all sectors, with private buyer uptake rising 12.6%, fleet deliveries up 9.5% – representing six in 10 (59.9%) registrations – and the lower-volume business segment up 61.3%.
Growth was driven by electrified vehicle uptake, with plug-in hybrids up 33.6% to take a 14.9% share of the market, and hybrids up 11.6% to account for 13.2%. Battery electric cars (BEVs) achieved another record volume for the month, up 44.5% – compared with a sub-par July 2025 when some buyers delayed switching until confirmation of full model eligibility for the Electric Car Grant (ECG) – to claim a 27.5% share.
The latest industry outlook now expects BEVs to reach 27.4% of a 2.18 million-strong market by year end – up from a 26.8% share in April’s outlook but still far short of the 33% mandate target. Longer term, BEV share is expected to rise to 32.1% in 2027 against a target of 38%. This is despite an ever-expanding number of brands and models, manufacturer subsidies, government incentives and an ongoing backdrop of high fuel prices. The outlook reflects manufacturer views submitted prior to the end of ECG eligibility for demonstrator and courtesy cars in mid-July. Given these vehicles currently account for around 10% of BEV registrations, and around a third of the BEV market is delivered through the ECG, the change could impact future performance.
While mandate flexibilities are helping bridge some of the gap between natural demand and ambition, they do not come without cost and their value will diminish as targets accelerate. The shortfall continues to be addressed by significant discounting, marketing and other fiscal support from industry and government – costs which are causing manufacturers to pause or even divert investment, while weakening residual values, damaging profitability and costing jobs.
Mike Hawes, SMMT chief executive, said, “July’s record EV performance is a great achievement, reflecting industry’s huge investment in zero emission mobility. But that progress cannot be sustained if manufacturers continue haemorrhaging billions in EV discounts, distorting demand to avoid even steeper penalties. The sector’s commitment to decarbonisation is not in doubt but its ability to remain viable – and attract investment for an EV future – is under intense pressure. A sustainable transition will not happen merely by compelling supply when underlying demand is not keeping pace despite year-on-year growth. We need urgent reform of the regulation, else Britain risks undermining its competitiveness and the jobs and livelihoods that depend on this industry.”
