SMMT warns the government that the new 3p per mile tax risks undermining crucial zero-emission vehicle targets for Electric Vehicles.

UK New Car Market: November Dip and the EV “Wake-Up Call”

The UK’s new car market faced a challenging November, with overall registrations falling by 1.6% to 151,154 vehicles. While a single-digit dip might seem minor, the data beneath the surface tells a more concerning story for the green transition. Crucially, the pure battery Electric Vehicles sector recorded its weakest year-on-year growth in almost two years, signalling a potential cooling in what has historically been a fast-accelerating market.

In November, 39,965 new pure electric vehicles were registered, marking a modest 3.6% increase from the same month last year. This was the smallest annual increase since late 2023, excluding the sharp contraction seen in December of that year which was largely driven by unique supply chain bottlenecks.

Consumer Hesitation & The ICE Preference

The Society of Motor Manufacturers and Traders (SMMT) attributed the overall market decline, the sixth monthly fall this year, primarily to a 5.5% drop in demand from private buyers. While fleet purchases saw a slight rise of 0.2%, the retail sector remains sluggish.

This stagnation suggests a widening gap between corporate adoption and individual consumer sentiment. Despite a record number of models now available in UK showrooms, private buyers are increasingly opting to stick with familiar petrol and diesel alternatives or are choosing to hold onto their existing vehicles for longer. The continued appeal of traditional Internal Combustion Engine (ICE) vehicles, coupled with persistent economic pressure, the increased cost of insurance and high upfront costs for new electric tech, is visibly slowing the pace of the transition among the general public.

A New Tax Burden: The 3p-Per-Mile “eVED”

The industry’s concerns were further amplified by the recent Autumn Budget. SMMT Chief Executive Mike Hawes issued a clear warning:

“Even in a fragile market, zero emission vehicle uptake continues to rise, which is exactly what we need. But the weakest growth for almost two years should be seen as a wake-up call that sustained increase in demand for Electric Vehicles cannot be taken for granted.”

A major point of contention is the Government’s decision to introduce a 3p-per-mile tax on Electric Vehicles (officially termed electric Vehicle Excise Duty or eVED) starting in April 2028. Chancellor Rachel Reeves introduced the measure to offset the long-term decline in fuel duty revenue. Under the new system:

• Electric Vehicle Drivers: Will pay 3p per mile.
• Plug-in Hybrid (PHEV) Drivers: Will pay 1.5p per mile.
• Annual Impact: For an average driver covering 8,000 miles a year, this equates to roughly £240 in additional annual taxes, on top of the standard VED rate.

While the Government has attempted to soften the blow by increasing the “Expensive Car Supplement” threshold from £40,000 to £50,000 for Electric Vehicles from 2026, industry leaders argue that the prospect of a “pay-per-mile” future may be deterring buyers today.

Mandate vs. Reality: The Sales Gap

The data reveals a growing friction between legislative targets and market reality. Electric Vehicles accounted for 22.7% of the total market share through the first 11 months of the year. While this is a record volume, it sits uncomfortably below the Government’s Zero-Emission Vehicle (ZEV) mandate, which requires manufacturers to hit a 28.0% sales target in 2025.

However, there is some nuance in how these targets are calculated. Green consultancy New Automotive suggests that once “flexibilities” such as trading credits and banking over-achievements from previous years, are accounted for, the effective 2025 sales target for many manufacturers is closer to 21.7%.

Even with these flexibilities, the industry is under immense pressure. Manufacturers are currently forced to rely on heavy discounting to move Electric Vehicle stock and avoid hefty fines, a strategy that many experts warn is unsustainable in the long term without more robust consumer incentives, such as VAT cuts on public charging or direct purchase grants.

Looking Ahead

As we move into 2026, the UK car market sits at a crossroads. The “early adopter” phase of electric vehicle ownership has largely concluded, and the industry must now find a way to convince the “mass market” that electric cars are not just a green choice, but a financially viable one. Without a reversal in private buyer sentiment, the path to 2030 remains steep and uncertain.