This guest editor article was written by Philip Nothard, Insight Director at Cox Automotive Europe.
The UK EV market continues to evolve against a backdrop of regulatory ambition, economic pressure, and shifting consumer sentiment. While recent data points to incremental progress in adoption, the pace of change remains misaligned with policy targets.
The EV market today
While we have seen marginal gains in the new car market this year, with EVs accounting for 22% of registrations in 2025 to date, up from 18% last year, this figure still trails behind the 28% target set out by the Zero Emission Vehicle (ZEV) mandate.
Longer term, if the market follows the same trajectory as the current EV adoption rate, we can expect EVs to achieve a 36% share of registrations and 10% of the used car parc by 2028. While this forecast indicates a positive trajectory for the UK EV market, it is not adequate to keep pace with the ZEV mandate. In 2028, the ZEV mandate targets 52% of sales being EVs, a feat that feels increasingly unrealistic. Without clear long-term incentives and consistent government support, we risk undermining recovery and stalling momentum in the transition to zero-emission vehicles.
Regulatory pressure
Beyond the ZEV mandate, new announcements from the UK government are exerting additional pressure on the market. Despite the extension of electric vehicle grants and investment in charging infrastructure, the government’s pay-per-mile tax looms heavily over the industry. While this will not come into effect for several years, the industry is feeling the impact of the announcement on consumer appetite for EVs.
How this tax will be calculated remains a mystery, and the true impact on the total cost of ownership remains unclear. Although the government acknowledges the impact this will have on EV adoption, it is disappointing that the industry will bear responsibility for managing this in line with the ZEV mandate targets.
Residual values
The EV sector has faced disproportionate depreciation compared with petrol, diesel and hybrid models. Between October 2022 and October 2025, residual values for EVs aged:
- Under 12 months: -29%
- One to two years: -37%
- Two to four years: -22%
Although EV residual values are performing at a lower rate than other fuel types, we are seeing signs of stabilisation. EVs under 12 months old have seen improvement this year, starting at 52% of original cost new (OCN) in January and rising to 56% in October.
This improvement has been driven by earlier market corrections and modest confidence among retailers and consumers in used EVs. A handful of asset holders have held back from defleeting their vehicles to soften the depreciation impact on the balance sheet, while replacing and adjusting their residual values to offset some earlier losses.
With values stabilising, used EVs can deliver affordability advantages. As cost-of-living pressures persist, lower priced EVs could become a bridge for buyers who are either cost-constrained or hesitant about a new EV purchase.
Looking ahead
In 2026, the industry needs to take a more proactive approach to highlighting the benefits of EVs and countering the misconceptions that still remain widespread. This is especially crucial as the cost of EV ownership has been misconstrued by the announcement of the 2028 pay-per-mile tax.
The EV market in the UK is at an inflection point. While challenges persist, from regulatory headwinds to marketplace volatility, the emergence of firmer used EV values and expanding consumer choice could lay the foundation for a more stable 2026.
For stakeholders across the automotive value chain, this represents a moment to capitalise on the opportunity. By aligning pricing strategies, enhancing consumer education and unlocking the value proposition of lower-priced used EVs, the industry can help sustain growth, strengthen confidence and advance the transition to electrified mobility.
As the UK EV market moves into 2026, its direction will be defined by the industry’s ability to respond to regulatory demands while restoring consumer confidence. Stabilising residual values, clearer policy signals, and a renewed focus on affordability will be critical in sustaining momentum. With coordinated action across the value chain, the sector has an opportunity not only to navigate near-term challenges but to reinforce the foundations of a resilient, long-term transition to electrified mobility.
These insights feature in Cox Automotive’s Insight Quarterly, which also includes forecasts for the new and used car markets.
