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UK EV discounts unsustainable, industry group warns
UK electric vehicle (EV) discounts are “unsustainable,” according to the Society of Motor Manufacturers and Traders (SMMT), as new car registrations in 2025 exceeded 2 million for the first time since the pandemic.
SMMT’s Mike Hawes said carmakers are offering significant discounts – estimated at over £5 billion (US$5.84 billion) last year – to meet sales targets, warning this approach cannot continue long term.
The UK government offers incentives like a £2 billion (US$2.3 billion) grant scheme and funds for charging infrastructure, but has also announced a “per mile” EV tax, which the Office for Budget Responsibility estimates could reduce EV sales by 120,000 over five years.
Industry leaders and commentators have called for a review of the mandate to better align with current market conditions.
🔗 Source: BBC
🧠 Food for thought
Implications, context, and why it matters.
Zero Emission Vehicle (ZEV) Mandate drives over £5 billion in 2025 EV discounts as fines drop from £15,000 to £12,000
- Carmakers cut EV prices by £11,000 each to reach the 28% sales target, while non-EVs see £6,000 off 1. Paying discounts costs less than the per-vehicle penalty, which moved from £15,000 to £12,000 2.
- They can borrow future compliance credits until 2029 and move credits between car and van pools 2. These tools help avoid penalties during the shift.
- The quota climbs to 33% in 2026, then 80% by 2030 1. The UK runs ahead of major markets, and it splits from the EU plan to revisit the 2035 end-of-sale date for new petrol and diesel cars 1.
Per-mile EV tax opens doors for telematics and payments firms
- From April 2028, the per-mile charge for EVs would use MOT odometer readings for yearly mileage checks (the MOT is the UK’s annual vehicle roadworthiness test) 3. Cars under three years would get extra checks at accredited testing providers, opening bids for secure verification systems.
- Most EVs ship with built-in telematics (in-vehicle data and connectivity systems) 4. Officials ask for views on optional tech that could cut admin. Payment firms can pitch tools to plug into Vehicle Excise Duty (VED) systems (the UK’s vehicle road tax) for mileage estimates and reconciliation 3.
- The consultation closes on 18 March 2026 5. Tech and payments firms have a window to shape specs and line up for pilots before the 2028 launch.
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