The UK’s new car market continued to see rising electric vehicle sales in January, while registrations of petrol and diesel cars dropped by a combined 23% year-on-year, Kallanish reports.

Data published by the Society of Motor Manufacturers and Traders (SMMT) shows a 41.6% jump in all-electric (BEV) registrations last month to 29,634 units. Sales of plug-in hybrids (PHEVs) and hybrids (HEVs) also rose by 5.5% and 2.9%, respectively.

All three EV powertrains registered market share growth, with BEV’s penetration rising to 21.3% from 14.7% in January 2024. Yet, while recognising that the figures reflect a “continuation of ongoing trends,” the SMMT argues that EV demand growth isn’t happening “fast enough” to deliver on current ambitions.

“Affordability remains a major barrier to uptake, hence the need for compelling measures to boost demand, and not just from manufacturers,” says SMMT ceo Mike Hawes.

The trade body warns that removing the exemption of the VED road tax for electric vehicles in April will impact demand, as it will add to the cost of a BEV. The government will apply the Expensive Car Supplement (ECS), dubbed the luxury car tax, to VED on electric vehicles. The threshold for the ECS was unchanged at £40,000 ($49,749) since it was set eight years ago, when BEVs barely featured.

From 1 April, all BEVs will be subject to £10 VED in the first year of ownership, followed by an annual VED of £195. For BEVs that cost more than £40,000, an additional £425 is currently charged annually in years 2-6 (£2,125) on top of standard VED, to give a total of £3,110.

“The application, therefore, of the ‘Expensive Car Supplement’ to VED on electric vehicles is the wrong measure at the wrong time. Rather than penalising EV buyers, we should be taking every step to encourage more drivers to make the switch, helping meet government, industry and societal climate change goals,” adds Hawes.

A solution proposed by SMMT is to raise the eligibility threshold for EVs or entirely exempt them from the ECS. This “would send the message that EVs are essentials, not luxuries, and ensure vehicle taxation remains fair and appropriate for today’s market conditions,” it notes.

Non-profit transport research organisation New AutoMotive says EVs had their strongest start to the year on record in January, a typically weak month for these sales. Its ceo Ben Nelmes notes the UK is fast becoming an EV leader in Europe, even with all the uncertainty around the government’s review of EV sales targets.

“The government needs to keep up the pace – any sudden changes to the rules could put the brakes on all the progress we’ve made,” adds Nelmes.

Under the ZEV mandate, the UK demands 28% of sales to be zero-emission this year. However, New AutoMotive says that when taking into account all the credits earned from the sales of less polluting petrol and diesel cars, manufacturers will need to meet a target of 23.1% instead. “Only just above this month’s market share,” it claims.