A surge in electric vehicle sales provided a significant economic jolt to the UK car market in September, pushing overall registrations up by 14% for the strongest performance since 2020. This growth, largely driven by new government subsidies, offers a bright spot for an industry that has been grappling with post-pandemic recovery and broader economic headwinds.
The electrified vehicle segment was the undisputed engine of this growth. Pure electric car sales rose by nearly a third to 72,800 units, while plug-in hybrids saw demand jump by 56%. Together, these vehicles accounted for more than half of all new cars sold, a milestone that underscores a fundamental shift in the market’s composition. This boom has been a boon for car retailers during September, a crucial month due to the new number plate release which helps vehicles retain resale value.
However, this positive news is tempered by the larger economic context. Despite the 14% year-on-year increase, total market sales of 312,900 are still well below levels seen before the coronavirus pandemic. The ongoing cost of living crisis continues to exert pressure on household finances, making major purchases like a new car a difficult proposition for many potential buyers. The reliance on taxpayer subsidies to stimulate demand highlights the market’s underlying fragility.
The government grant of up to £3,750 was reintroduced to help both consumers and carmakers, who were struggling to meet sales targets. While effective, the subsidy’s reach is limited, applying only to models under £37,000. This price cap, combined with other rules, means the incentive is available for only about a quarter of battery EVs on sale, channeling demand into a specific, more affordable segment of the market.
As the industry leverages this subsidy-fueled momentum, questions about the future remain. The year-to-date EV market share of 22.1% is still below the government’s 28% target, indicating an ongoing challenge. Furthermore, the grant’s potential early closure due to its popularity could remove a key pillar of support, testing whether the market can sustain its growth amid persistent economic pressures.