Record September EV sales fuelled by 'unprecedented' discounting

The UK new car market rose 1.0% in September, its best performance since 2020 but still close to 20% below the last pre-Covid September of 2019.

The figures, in what due to registration plate changes is typically the second-busiest month of the year after March, will bring little cheer to dealers or manufacturers. The growth was driven by fleet purchases, up 3.7% while private consumer demand continued to fall by 1.8%.

Meanwhile registrations of battery-electric vehicles (BEVs) hit a new record volume for any month in September, up 24.4% to 56,387 units, achieving a 20.5% share of the overall market, up from 16.6% a year ago.

However the growth was driven by aggressive discounting by manufacturers desperate to meet the requirements of the Government’s Zero-Emissions Vehicle (ZEV) Mandate and avoid punitive fines, discounting described by the Society of Motor Manufacturers & Traders, which produces the registration figures, as “unprecedented”.

Even this failed to significantly shift the market share of EVs, which edged up from 17.2% in the first eight months, to 17.8% from January- September. The huge manufacturer discounting produced a 3.6% rise in private BEV demand but this represented just 410 additional registrations and consumer demand for diesel cars grew faster, up 17.1%, 1,367 units.

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The SMMT predicts an 18.5% share for EVs by the end of the year, significantly short of the Government’s required 22%. Year-to-date private BEV demand remains down 6.3%, the SMMT stating that this underlines the scale of the challenge involved in moving the mass market to meet mandated targets that were conceived in very different economic, geopolitical and market conditions.

Previous assumptions of a market delivering steady BEV growth, cheaper and plentiful raw materials, affordable energy and low interest rates have not come to fruition, with the upfront cost of BEV models remaining stubbornly high. Meanwhile consumers remain unconvinced of the level of the UK’s charging provision – despite recent investment and growth – and this is still acting as a barrier to BEV take-up.

The SMMT calculated that manufacturers are on course to spend at least £2 billion on discounting EVs this year, which when added to the many billions already invested to develop and bring the vehicles to market, is being described as an untenable situation threatening manufacturer and retailer viability.

As a result the SMMT and 12 major vehicle manufacturers, representing more than 75% of the UK market, have written to the Chancellor of the Exchequer ahead of the Budget at the end of October, urging measures to support consumers and help speed up the pace of the EV transition.

The measures called for include temporarily halving VAT on new EV purchases to replace a predicted more than two million new petrol and diesel cars by ZEVs by 2028; Scrapping the VED ‘expensive car’ tax supplement for ZEVs, due next year, to avoid penalising buyers; Equalising VAT on public charging to match the 5% home charging rate, and mandating infrastructure targets to support those who cannot charge at home; and maintaining and extending the business incentives that are working, including Benefit in Kind which supports company cars and those on salary sacrifice schemes, and the important Plug-in Van Grant.

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SMMT chief executive Mike Hawes said that while on the surface the September figures appear positive, look underneath and there are serious concerns as the market is not growing quickly enough to meet mandated targets.

“Despite manufacturers spending billions on both product and market support – support that the industry cannot sustain indefinitely – market weakness is putting environmental ambitions at risk and jeopardising future investment,” Hawes said.

“While we appreciate the pressures on the public purse, the Chancellor must use the forthcoming Budget to introduce bold measures on consumer support and infrastructure to get the transition back on track, and with it the economic growth and environmental benefits we all crave.”

Industry backing

Industry figures supported the SMMT view. Philip Nothard, Insight Director of remarketing and digital dealer marketing specialist Cox Automotive, described the results as less about the headline growth and more about how it was achieved. “EV sales surged due to unprecedented discounting, masking weak underlying demand, especially among private buyers,” Nothard said.

“Fleet purchases drove the market, while private demand dropped, reflecting ongoing financial strain from the Zero Emission Vehicle mandate. The month’s results define how the year will end, with manufacturers and industry bodies calling for more support as the gap between EV targets and real consumer behaviour widens.”

Nothard added; “The 2024 figures are essentially set, but the focus shifts to the potential challenges in 2025. The market may face further disruption if current dynamics persist, including heavy reliance on discounts and weak private EV demand. Structural changes and more substantial incentives will be crucial to ensure sustainable growth moving forward.”

John Wilmot, CEO of car leasing comparison site Leaseloco said that the underlying concerns cannot be ignored.” The market isn’t growing quickly enough, and while heavy discounting has provided a short-term boost, it isn’t a sustainable solution for long-term growth,” he said.

“As the industry faces increasing pressure to meet the market share targets set by the zero-emission vehicle mandate, the government must step in with consumer incentives to make the switch to electric vehicles more appealing and accessible,” Wilmot added.

“Charging infrastructure remains a significant hurdle for many buyers, especially those without access to off-street parking. Accelerating the rollout of superfast charging stations will be key to driving growth in this emerging market – without bold government intervention, the shift to EVs risks losing momentum entirely.”

Overall 275,239 new cars were registered in September. Uptake of plug-in hybrids (PHEV) grew faster than any other fuel type in the month, up 32.1% to take an 8.9% share of the market. Hybrid electric vehicle (HEV) registrations rose 2.6%, boosting market share to 14.2%, while petrol and diesel registrations declined by 9.3% and 7.1% respectively, although together they took 56.4% of the September market.