What's happened
In 2025, UK new car registrations surpassed 2 million for the first time since 2019, driven by a 24% rise in electric vehicle (EV) sales, which now hold a 23.4% market share. Chinese brands, notably BYD and MG, nearly doubled their UK market share to 9.7%, intensifying competition. Meanwhile, Tesla's UK sales declined 8.9%, reflecting broader challenges including political controversies and product delays. The UK government plans to review EV sales mandates in 2026 amid industry calls for clearer policies.
What's behind the headline?
Rising Chinese Influence and Market Dynamics
Chinese automakers have rapidly expanded in the UK, nearly doubling their market share to 9.7% in 2025, led by brands like BYD, MG, and Chery. This surge challenges traditional European and Japanese manufacturers, who have seen declining sales. The UK's lack of tariffs on Chinese imports contrasts with the EU's tariffs, giving Chinese brands a competitive edge, especially in hybrids.
Tesla's Decline Amidst Controversies and Competition
Tesla's UK sales fell 8.9% in 2025, mirroring global declines. Factors include reliance on aging models, delayed launches like the Cybertruck, safety concerns, and Elon Musk's polarizing political engagements. Despite this, Tesla remains the UK's top-selling EV brand but faces intensifying competition from Chinese entrants.
Policy Ambiguity and Industry Challenges
The UK's EV market growth is tempered by mixed government messaging: generous EV grants coexist with a forthcoming pay-per-mile tax. Manufacturers have heavily discounted EVs, incurring unsustainable costs. The planned early review of the ZEV mandate in 2026 reflects industry pressure for clearer, consistent policies to sustain investment and consumer confidence.
Infrastructure and Production Outlook
UK EV charger installations slowed in 2025, with regional disparities in access. Nissan's £450m investment in Sunderland to produce the third-generation Leaf signals commitment to domestic EV manufacturing, though broader industry uncertainty persists amid global shifts and EU policy relaxations.
Forecast
The UK EV market will continue growing but faces headwinds from policy uncertainty, competitive pressures from Chinese brands, and legacy automaker adjustments. The government's upcoming ZEV mandate review is pivotal to setting a sustainable trajectory. Consumer adoption hinges on clearer incentives and infrastructure expansion, while manufacturers must innovate to remain competitive.
What the papers say
Jasper Jolly in The Guardian highlights the rapid rise of Chinese brands in the UK, noting that "Chinese companies accounted for 9.7% of the 2m new car registrations in the UK in 2025," nearly doubling their share from 2024. He points out the competitive pressure this creates for European and Japanese manufacturers, with MG and BYD leading the charge. Neil Lancefield in The Independent underscores the mixed government messaging, quoting SMMT chief Mike Hawes: "Rising EV uptake is an undoubted positive, but the pace is still too slow and the cost to industry too high," and highlighting the unsustainable £5.5 billion in EV discounts. Reuters reports Tesla's UK sales fell 8.9% in 2025, though it remains the best-selling EV brand, while BYD's registrations jumped nearly five-fold in December alone. Jonathan M. Gitlin of Ars Technica details Tesla's struggles, citing product delays and safety concerns, and notes the company's sales decline despite Musk's AI ambitions. The Guardian's coverage of Nissan's £450m investment in Sunderland to produce the new Leaf illustrates ongoing UK manufacturing efforts amid industry challenges. The Independent and The Guardian also discuss the EU's recent decision to relax its 2035 combustion engine ban, contrasting with the UK's firm 2030 petrol and diesel ban, though the UK plans to review its EV sales targets earlier than scheduled. These sources collectively paint a picture of a UK EV market growing but facing significant competitive, political, and policy challenges.
How we got here
The UK government set a zero-emission vehicle (ZEV) mandate targeting 28% EV sales in 2025, with plans to ban new petrol and diesel cars by 2030. However, industry lobbying and geopolitical pressures have led to softened targets and mixed policy signals, including a new pay-per-mile EV tax. Concurrently, the EU has proposed relaxing its 2035 combustion engine ban, creating divergence in regional EV policies.
Go deeper
- How are Chinese car brands impacting the UK EV market?
- What challenges is Tesla facing in the UK and Europe?
- What changes are expected in UK government EV policies in 2026?
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