Automakers in the UK are set to provide at least £2 billion ($2.6 billion) in electric vehicle discounts this year, yet they’re still falling short of the government’s sales mandate, according to a Bloomberg report.

Record EV Registrations, but Not Enough

Despite steep price cuts driving battery-electric vehicle registrations to a record high in September, zero-emission cars failed to meet the 22% market share target set by the UK government for this year.

The Society of Motor Manufacturers and Traders (SMMT) reported that EVs accounted for 20.5% of total sales in September and 17.8% of all registrations in the first nine months of 2024.

Mike Hawes, SMMT’s chief executive officer, warned: “Despite manufacturers spending billions on both product and market support – support that the industry cannot sustain indefinitely – market weakness is putting environmental ambitions at risk and jeopardizing future investment.”

Government Mandates and Industry Pushback

The UK government has set ambitious targets for EV adoption, including plans to end sales of new petrol and diesel cars by 2030. However, the industry is pushing back, citing concerns about the rapid phase-out of combustion engines and the scaling back of government incentives.

Stellantis NV and Ford Motor Co. have raised concerns about the UK’s aggressive timeline. The pullback of subsidies across Europe has contributed to a slump in EV demand and profit warnings from major manufacturers.

Fines and Flexibility

Automakers face potential fines of up to £15,000 ($18,450) per vehicle if they fail to comply with the UK’s mandate. However, they can avoid penalties by buying credits from overachieving manufacturers.

The SMMT is advocating for more support from the government. In a letter to Chancellor of the Exchequer Rachel Reeves, co-signed by UK heads of carmakers including Stellantis, Volkswagen, and Nissan Motor Co., the industry group requested a reduction in the value-added tax on EV purchases to 10% for the next three years.

EVXL’s Take

The UK’s EV market is at a critical juncture. While the 25% increase in battery-electric vehicle sales last month is promising, the industry’s struggle to meet government targets highlights the challenges of rapid EV adoption. This situation mirrors global trends, where automakers are investing heavily in electrification while grappling with market realities.

As we’ve seen in recent Ford and Volkswagen news, balancing ambitious EV goals with profitability and consumer demand is a delicate act. The UK’s experience underscores the need for continued collaboration between governments and automakers to create sustainable EV markets.

What’s your take on the UK’s EV discount strategy? Share your thoughts in the comments below.