UK electric car sales leap ‘could be hit by Iran war inflation and energy price rises’

A recent jump in electric car sales in the UK is likely to be “tempered” by worries over rising inflation and energy prices caused by the Iran war, a leading industry body has warned.

New car sales in the UK rose by 24% year on year to 149,247 in April, according to the Society of Motor Manufacturers and Traders (SMMT).

The trade body said battery electric vehicle (BEV) sales jumped by 59.1% last month and the two millionth electric car had been registered. They accounted for more than a quarter (26.2%) of total car sales last month.

Buyers’ interest in electric cars has risen across Europe since the start of the war in Iran, as the rising cost of petrol highlights the cheaper power available from a plug.

However, the SMMT said on Tuesday that the conflict’s full impact on consumers was “yet to be seen, with rising interest in EVs potentially tempered by concern over inflation, higher energy prices and the resultant negative impact on the cost of living”.

Overall, the jump in car registrations last month reflected a rebound from an unusually weak April last year, after consumers had rushed to buy in March to beat incoming vehicle tax increases.

The exemption from vehicle excise duty for zero- and low-emission vehicles was scrapped on 1 April last year, and the expensive car supplement was applied to BEVs. This meant electric vehicles with a list price above £40,000 were affected by the luxury car tax for the first time, at an annual cost of £425 on top of the standard rate of duty. The threshold was later changed to £50,000 and applied retrospectively.

Despite the jump in BEV sales, they have made up 23.1% of the market this year, short of the 33% required by the zero emission vehicle mandate, despite many manufacturers offering discounts and the introduction of the electric car grant last year.

Car sales grew across all areas, led by fleets, up 26.8% to 90,462 registrations. Purchases by individuals grew 20.2% to reach 56,116, while sales to the smaller business sector rose 15% to 2,669.

Demand for petrol cars rose 8.2%, while diesel sales dipped 1%. Electrified cars accounted for more than half (53.2%) of the market for the second month this year. Plug-in hybrid sales climbed 46.4% to take a 13.8% market share, while hybrid electric vehicles increased 18.8% – 13.2% of the total.

There is improving confidence in the overall market, but expectations for EV demand have weakened. Total new car sales in 2026 are now expected to rise 3.6% to 2.093m, up from January’s 2.048m outlook, but the BEV share has been downgraded to 26.8%, from 28.5%, after a weaker than expected first quarter.

Next year, the SMMT is forecasting car sales of 2.1m, including 32% BEVs – six percentage points below the mandate target.

Energy, production and charging costs remain high and consequently demand has not grown as fast as assumed when the mandate was set. It took effect in January 2024.

Mike Hawes, the SMMT chief executive, said: “April’s rebound is welcome, but underlines just how significantly fiscal changes can influence the market. Two million electric car registrations is a considerable milestone to celebrate, although natural demand is still well below the level demanded by the mandate.

“The mounting cost of compliance threatens to limit consumer choice, overall decarbonisation and the sector’s competitiveness so the need for a rapid review of the transition to align policy with market realities is unchanged, else Britain’s attractiveness as a vehicle market and manufacturing hub will be put at risk.”

Last month, data from the car sales website Autotrader showed the price of new battery electric cars had fallen below petrol cars in the UK for the first time.