Car sales slow in July: Consumers postpone electric vehicle purchases, waiting for the Government to confirm tax incentives
The UK Government's recently announced Electric Car Grant (ECG) has given a significant boost to the electric vehicle (EV) market, according to industry reports.
New car sales fell 5% last month compared to the same month in 2024, but the demand for electric cars eased only slightly, with a year-on-year growth of 9%. This growth is particularly impressive considering the overall decline in new car sales.
The ECG, which offers discounts of up to £3,750 on some new electric vehicles, seems to be the driving force behind this trend. Details of which models are eligible for the grant and the amount of money knocked off their recommended retail price have only started to filter through this week.
As of now, the Citroën e-C3, e-C4, e-C5, and e-Berlingo models are eligible for the £1,500 grant. Thirteen models from Nissan, Renault, and Vauxhall have also been approved, though specific models are not yet detailed.
The SMMT slightly upgraded its forecast for full-year new car registrations, to 1.9 million, thanks in part to the expected increase in EV sales.
In terms of the most popular models, Ford's Puma and Kia's Sportage continue to dominate the market. However, Tesla, which is not eligible for subsidies due to all its cars being over £37k, posted a huge 60% fall in registrations last month.
The first electric car models eligible for the new Government grants were announced on Tuesday. The grant requires manufacturers to apply to the Department for Transport on behalf of their eligible models. Vehicles must meet specific criteria, including being priced at or below £37,000, meeting sustainability and environmental standards, having a verified Science-Based Target for carbon reduction, achieving an embodied carbon score below a defined threshold, meeting warranty and battery range criteria, and meeting the highest sustainability standards for a £3,750 grant.
Registrations of plug-in hybrid cars increased by a third, suggesting that discounts through the grant or by brands cutting prices themselves will 'trickle through to EV sales in the coming months'.
It's worth noting that sales of new petrol, diesel, and conventional hybrid cars all stalled last month, with decreases of 15%, 8%, and 11% respectively. This further underscores the growing interest in electric vehicles.
The SMMT confirmed that 140,154 new cars were registered in July, marking a three-year low. However, electric cars held a 21.3% share of the new car market last month, a significant increase from previous months. The Society of Motor Manufacturers and Traders (SMMT) also confirmed that EVs are forecast to hold a full-year market share of 23.8 per cent, more than 4 percentage points below the Government's Zero Emission Vehicle (ZEV) mandate's requirement.
Ian Plummer, commercial director at online vehicle marketplace Auto Trader, said the grant has provided a 'much-needed boost' for consumer interest in new electric cars. With more models becoming eligible for the grant in the coming months, it seems that the electric vehicle market in the UK is poised for continued growth.
[1] https://www.gov.uk/government/publications/eligible-vehicles-for-the-plug-in-car-grant/eligible-vehicles-for-the-plug-in-car-grant [2] https://www.autocar.co.uk/car-news/new-cars/nissans-e-juke-and-e-note-eligible-uk-government-grant [3] https://www.autocar.co.uk/car-news/new-cars/electric-car-grant-uk-launched-today [4] https://www.autocar.co.uk/car-news/new-cars/new-citroen-e-c3-e-c4-e-c5-e-berlingo-prices-and-specs-revealed [5] https://www.autocar.co.uk/car-news/new-cars/uk-government-electric-car-grant-announced-0
- Consumers may find it advantageous to consider a combination of technology-enhanced electric cars and insurance policies to optimize their savings, as the UK Government's Electric Car Grant (ECG) and the growing demand for electric vehicles may lead to cost-effective new car options.
- The rapid expansion of the electric vehicle (EV) market in the UK, propelled by the ECG and the emergence of eligible electric vehicles such as the Citroën e-C3, could contribute to a significant shift in the automotive industry, potentially inspiring advancements in insurance solutions tailored for electric cars to address specific risks.
