Fleet buyers are embracing the EV, but private consumer adoption is lagging, in part because of high public charging costs
Ambitious EV targets are putting severe pressure on domestic manufacturers, which face fines if they miss these goals
Chinese EV imports, unrestricted by tariffs, are creating intense price competition and forcing established manufacturers into costly discounting

EV growth in the UK comes at a cost. Cheap EVs are a boon to consumers, but car manufacturers complain government targets make production uneconomic.

Domestic and European car manufacturers are facing more competition from Chinese EV brands. This makes it harder for them to reach their targets to produce battery-powered cars.

EV discounting is already apparent and calls are growing for more support from government. There are challenges for both domestic manufacturers and the establishment of an efficient charging network to encourage consumers to switch.

Tough targeting

The UK has set ambitious EV sales targets for car manufacturers of 22% for this year and 28% in 2025. This will rise to 80% by 2030 and 100% by 2035.

If targets are not met, credits can be temporarily used, but then fines kick in. This puts traditional ICE producers at a distinct disadvantage compared to start-up EV specialists such as Tesla or China’s BYD.

Meanwhile, Chinese EV producers benefited from Beijing’s support. This has led to heavy tariffs on Chinese imports to the EU, US and Canada. The UK has no tariffs on overseas EVs.

Data on UK EV sales progress is mixed. According to EY’s latest Mobility Consumer Index from October, car buyers are increasingly turning towards EVs, with interest in petrol and diesel cars dropping.

Firing up fleets

It said 59% of those planning to buy a vehicle in the next two years prefer EVs, hybrid electric vehicles (HEVs), or plug-in hybrid electric vehicles (PHEVs). This is up from 54% in 2023. Of these, 23% are likely to opt for a EV, up from 19% last year.

High upfront costs are the biggest deterrent, while environmental concerns are the top motivator to buy EVs.

According to the Society of Motor Manufacturers and Traders’ (SMMT) figures to September, actual purchases lag consumer intentions. It said EV sales hit a record monthly volume in September of 56,387 units or a 20.5% market share, up from 16.6% a year ago.

This pushed the EV figure for the first nine months of the year to 17.8%. SMMT expects it to reach 18.5% by year-end –still below the 22% mandate.

It is corporate buyers that dominate the market. In September, fleet deliveries rose 36.8%, making up 75.9% of registrations.

Asif Ghafoor, CEO of charging network Be.EV, said the October Budget had been positive in keeping corporate incentives for EV fleets. “This is the easiest and quickest way to accelerate the EV transition,” he suggested. Ghafoor called for the 2035 ICE ban to move back to 2030.

Going private

While fleet buyers are bought on EVs, private owners are less certain. Private EV demand rose 3.6% in September after heavy manufacturer discounting, this is estimated to cost £2 billion for the year, or about 12% per car. Offsetting this, there has been a rise of 17.1% in private demand for diesel cars.

SMMT noted weak car sales this year meant private EV sales to September were 6.3% lower than the same period in 2023.

Consumers are concerned over high upfront costs and they tend to lack confidence in the charging provision. Investment and growth is under way in charging, but the message to the public lags reality.

Russell Olive, UK director of EV charger software company vaylens, said the government needed to offer fiscal incentives and industry investment. This would “ensure manufacturers and sellers can survive the transition period as buyers get used to the idea of buying EVs.”

Commercial director at Serconnect, Kevin Richardson, suggested more consumer grants and tax incentives to reduce upfront EV costs.

He also recommended education programmes for consumers and extending Ultra Low Emission Zones (ULEZ) beyond major cities. The Budget’s road tax hike on EVs, from April 2025, and continued freezing of fuel duty were steps in the wrong direction.

Besides upfront price, public charging infrastructure and prices deter EV uptake in the UK. Olive said the government needed to support industry in building the charging infrastructure to replace petrol stations and expand power generation capacity for new EVs.

However, EY said concerns over a lack of charging infrastructure were falling. Its consumer survey found 23% of respondents concerned over this in 2024, compared to 37% in 2023.

The charging issue is particularly thorny for those without off-street or private parking. This is most apparent in urban, lower-income areas. If you can’t charge at home, it means a higher cost per mile, making EV ownership less appealing.

Thus far, drivers with off-street parking have dominated purchases of EVs, according to John Rainford, country manager at EV charging company Jolt. He said these drivers account for 84% of EVs.

Charging at home means average annual charging costs of just £139, compared to £1,587 for those dependent on public chargers.

Councils partnering with a single EV charger brand tends to keep prices high, although the argument goes this helps expedite rollout.

Charging costs

Rainford said JOLT’s recent survey showed growing interest in new and second-hand EVs.

“But it needs to be financially viable for all, ensuring the cost per mile for those relying on public charging is competitive with – or ideally lower than – petrol. This includes lower prices for public chargers and addressing the VAT disparity between public and home charging.”

Richardson said there needed to be a focus on installing ultra-fast chargers along major roads and in urban centres for quick, convenient charging. This could help simplify regulations and “standardising infrastructure requirements for a seamless user experience.”

Ghafoor noted that private money was flowing into EV charging, aiding EV uptake. “The government pledged to spend £200 million on charging, but key charge point operators in the private sector have already committed £6bn to drive the sector forward.” Therefore, removing red tape is the best thing the government can do to help.

Manufacturing targets

There are challenges for consumers, but the problems for manufacturers is greater.

The discounting and heavy investment to launch new models has threatened “manufacturer and retailer viability,” SMMT said. The industry group and its members are pressing the government for more measures to support consumers and the EV transition.

Straits Research is working on a report on EV uptake in the UK. Senior researcher Pragati Gaikwad agreed that car manufacturers faced obstacles in meeting the UK’s 2024 22% target. However, he said “with added incentives and infrastructure improvements, next year’s 28% target is still within reach.”

Car catch up

Currently some brands are as low as 3%, he said. Vans also have targets, which may be easier to meet, starting at 10% in 2024 and reaching 70% by 2030 and 100% by 2035.

Serconnect’s Richardson warned that this year was a struggle – and that next would be worse.

“While leading manufacturers like Tesla and Hyundai are in a better position to hit these targets, others are playing catch-up,” he said.

“The supply chain constraints, high battery costs, and limited model availability have made it a challenge for manufacturers. Meeting the 28% target in 2025 will likely prove even more challenging, especially for traditional car manufacturers who are still ramping up their EV production capabilities.”

Gaikwad said manufacturers that fell short would need to buy credits from companies exceeding targets, or face a £15,000 fine per non-compliant vehicle sold. “The scheme also allows borrowing up to 75% of the annual target in 2024, decreasing to 25% by 2026, to aid firms with low EV volumes initially.”

He added that failure to meet targets was leading to speculation over EV discounting, putting pressure on manufacturers and retail chains.

A rise in sales from pure EV manufacturers would provide more credits, but also add competition for traditional ICE manufacturers in the EV market.

For example, VW has lost almost half its share value and had to close three German factories – for the first time since WW2.

China squeeze

There is a global trend to put up trade barriers, particularly to challenge Chinese manufacturing.

The UK has not yet taken this route, perhaps out of concerns over retaliation.

There is another reason, though. Keeping prices low for EVs helps the UK meet its climate goals.

Chinese EV brands dominate global production. This year, EV sales in China surpassed 50%. New models are outcompeting ICE vehicles on range and cost – making their lifetime costs significantly cheaper due to low running costs.

Without tariffs, the wave of EV-only producers could grow significantly in the UK. This makes it tougher for legacy brands, but easier for the government to persuade consumers to switch.

Simon Geale, executive VP at Proxima, said EV imports from China grew around 21% last year. That was while total Chinese imports declined. EVs make up nearly 10% of Chinese supplies to the UK, he said, citing UK government statistics.

Tariffs in other countries may direct more Chinese EVs to the UK, increasing pressure on local producers. Gaikwad noted the EU had tariffs of up to 47.6% of the wholesale price, depending on the brand, while Canada was going for 100% levies.

“In contrast, the UK is unlikely to increase tariffs, making it a ‘safe haven’ for Chinese brands. This could make Britain a target market for Chinese electric car makers like SAIC (MG), BYD, and Geely (Volvo, Polestar).”

The UK government is considering strategies such as temporary import restrictions to manage a surge in imports.

China-made Byd Dolphin Mini — *Byd’s Dolphin Mini*

Price competition

Geale said that, without tariffs on Chinese imports, “it is very difficult to see how UK manufacturers or European manufacturers can compete on price … It is hard not to imagine a continued influx at the ultra-low-cost end of the market.”

The VP said that, to compete, UK manufacturers would need to work on “supply chain optimisation and automation”. This might allow them to “mitigate some of the potential cost gap and hope to win on a value or money play”.

Erlend Ek, energy lead at China Policy, speaking on a Menas Associates webinar this week, noted that pressure is on Chinese EVs also. Chinese producers are putting more “high-tech gadgets in cheaper cars”, as they compete for market share.

China is “stuck in an aggressive cycle”, he continued. “It’s trying to avoid a race to the bottom but at the same time not pulling back from its global aspirations.”

There are positives around the UK’s avoidance of tariffs on Asian investment. Reports show interest among Chinese manufacturers to set up in the UK.

Omoda, a subsidiary of Chery, has put forward plans to establish an assembly plant in the UK. EVE Energy, a Chinese battery maker, proposed investing over £1 billion in a gigafactory, near Coventry. Meanwhile, India’s Tata has battery plans in Somerset.

Block or collaborate

The UK, as a small but relatively open economy, has advantages in attracting interest from global vehicle producers. It boasts strong consumer demand for a variety of vehicles, engineering talent and a skilled workforce.

The easy option is to announce tariffs. The more complex option – but ultimately more rewarding – would be to determine where the UK could or should be competing.

Government must play a part as matchmaker in securing vehicle supply chains. As it develops an industrial strategy, clearer leadership is needed to determine whether it sees vehicle manufacturing as an area to support.

The path towards EV adoption in the UK is not just about meeting targets. It’s about positioning the country to thrive in a changing landscape. Can the UK capture manufacturing and foster innovation, while staying competitive in order to deliver a sustainable future?

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