Written evidence submitted by Green Alliance (SEV0094)

About Green Alliance

Green Alliance is an independent think tank and charity focused on ambitious leadership on climate, nature and resource use. Since 1979, we have been working with the most influential leaders in business, civil society and politics to accelerate political action and create transformative policy for a green and prosperous UK. Transport is a focus of our climate work as it is the highest emitting sector in the UK and greener transport is a major opportunity for the UK.

Summary

Switching away from fossil fuel to electric powered vehicles (EVs) is a critical milestone in cleaning up air pollution in towns and cities and meeting the UK’s climate targets. The growing number of EVs on the roads is already helping to accelerate emissions reductions.[1]

More consumers are adopting EVs and 62% will now consider purchasing an EV for their next car.[2] They have far more options to choose from, with 160 models spanning most price points at better value than ever before.[3] Consumers can benefit from significantly lower running costs by adopting an EV.

Adoption to date has met the real targets of the Zero Emission Vehicle Mandate, the UK’s main supply-side policy driving new EV sales. However, the rate of growth in EV sales will need to increase significantly towards 2030. Barriers remain in up front cost, the cost and availability of public charging, and consumer trust in EVs in a frequently negative media environment.

The transition is a massive economic and industrial opportunity, but action is needed now to ensure the UK’s industry maintains its market share, in the face of intense competition from low-cost Chinese carmakers. Across the world, almost 22 million passenger EVs were sold in 2025, and most of these (69 per cent) were be made in China.[4]

The government has taken significant steps to promote uptake, such as committing nearly £2 billion to the Electric Car Grant, investing in the public charging network, and recently launching a public information campaign on the benefits of EVs.[5] In this submission, we make the case that consumer and industrial policy needs to work hand in hand to keep adoption growing while securing the future of the British car industry.

How effective have Government policies been in driving EV adoption to date, and what further action is required to accelerate take-up?

The government has the right ambition and adoption to date has been strong

We welcome the government’s ambition to be the leading centre in Europe for the production of EVs. Consumer demand for EVs is accelerating and the UK became the largest EV market in Europe in 2024.[6] In October 2025 more EVs were sold in the UK than petrol cars for the first time, and in December Europe passed the same milestone.[7] There are 1.7 million battery electric vehicles on UK roads now, more than 7.5 times the number in 2020.[8] In 2025, battery electric vehicles accounted for 23.4% of new registrations.[9]

The Zero Emission Vehicle Mandate is working, creating competition between manufacturers to deliver better and cheaper EVs to market

A number of demand side policies have helped to promote EV uptake including early tax incentives, grants and the introduction of a salary sacrifice scheme for EV purchases, but the keystone policy for delivering the EV transition in the UK is the zero emission vehicle (ZEV) mandate. This supply side policy sets a growing portion of new car and van sales that must be zero emission each year, up to 2030 when 80% of new sales must be ZEVs, with the remainder hybrid vehicles as internal combustion engine (ICE vehicles) are phased out. The Carbon Budget and Growth Delivery plan published in October 2025 shows that the ZEV mandate is the biggest single carbon reduction policy that the government currently has. It is essential to deliver the emissions reductions necessary to meet the sixth carbon budget (2033 – 2037) on the road to net zero by 2050.[10]

Many manufacturers now offer EVs for less than £25,000 and the variety has grown immensely, with more than 160 different EV models now available across all segments.[11] Major automakers who were previously behind have caught up, notably Ford who have benefited from the government’s Electric Car Grant. Ford has seen EV sales increase over 200% with drive units produced in Halewood in Merseyside, securing well paying jobs to the area.[12] 

The price differential between internal combustion engine (ICE) vehicles and EVs continues to shrink under the mandate, from 59 per cent in 2020 to 17 per cent at the end of 2025 according to Autotrader data. Price parity is expected within two to three years (c. 2028). The Climate Change Committee, for example, sets out an optimistic outlook for the uptake of EVs, suggesting that price parity between 2026 and 2028 will drive a higher uptake than ZEV mandate projections.[13]

Government policies and incentives have enabled the market to grow to this point

EVs can deliver savings over time both for households and businesses. The running cost savings for drivers who buy electric and have their own charging point are significant at up to £1400 a year.[14] Consumer demand is continuing to grow as the benefits of EVs become better known. According to Persuasion UK, 58% of consumers think their next car will definitely or probably be a BEV.[15]

Government tax policy and incentives have been a key part of growing the market to where it is today. The reintroduction of direct purchase subsidies through the Electric Car Grant is a positive step to keep the momentum of the transition (see more below).

Around six million vehicles on the roads today are part of a vehicle fleet, operated by organisations of all sizes across the public and private sectors. EV adoption in fleets has been underpinned by salary sacrifice and the benefit in kind (BIK) tax impact on employees.[16] For example, on company cars with a list price of £37,500 at the maximum BIK rate, an employee would pay £225 a year on an EV, compared to £2641.80 on an ICE vehicle (this financial year 2025/6).[17] BIK rates for EVs are increasing each year to 2029 but will remain significantly lower than for petrol, diesel, and hybrid vehicles. Until April 2025, EVs were also exempt from paying Vehicle Excise Duty.

The tax environment for EVs is changing as the Treasury looks to balance revenue raising with incentivising uptake. We support the introduction of road pricing in principle, but we are deeply concerned about the proposed timeline for introduction of this new tax because of the impact it could have on consumer demand at a crucial point in the transition. Introduction in 2028 before manufacturers have to meet sharply rising sales targets in 2028/9 and eVED risks dampening demand and sales. The EV transition must be allowed to meet a tipping point before this new tax is introduced. We strongly recommend securing the transition by delaying introduction until 2030 when price party should have been reached and the end of pure ICE sales will have been mandated by law.

Ensuring that charging infrastructure is in place is a crucial enabler for uptake

According to ZapMap, as of the end of 2024, there were one million charge points installed at homes with driveways across the UK.[18] Around two-thirds of households have a driveway or dedicated parking space so this home charging network can expand.

On public charging, the National Audit Office’s 2024 report found that overall the public chargepoint rollout was on track to meet the 300,000 that government estimates is the minimum needed across the UK by 2030.[19] The network continues to grow with almost 88,000 public chargepoints available. But the rate of new installations actually reduced between 2024 and 2025, with just over 14,000 installed in 2025 compared to almost 20,000 in 2024.[20] There also remains significant regional inequalities in the roll out of charging infrastructure. For example, by October 2025, London had 300 public charging devices per 100,000 people compared to just 78 per 100,000 in the North West.[21]

The charging industry has noted that the EV “mood music” has been mixed for 18 months. Changes to the ZEV mandate and an often unchallenged media narrative talking down the EV transition contributes to a lack of confidence for installations.

To meet the 2030 phase out for new sales of internal combustion engine (ICE) vehicles, progress needs to not only continue but accelerate

Major growth in EV sales is needed in the years before the 2030 pure ICE phase out that the government has reinstated. Electric cars remain more expensive on the dealership floor today and they require consumers to adapt to a new way of driving and charging, and often to make changes to their home.

In order to achieve this, the government needs coordinated action at both an industry and consumer level to support domestic manufacturers, counter misinformation, drive continued infrastructure investment and boost demand. We explore these specific measures in the answers below.

Above all the government must deliver certainty for industry and consumers on the direction of travel. The government’s promise to open another review into the ZEV mandate in 2026/27 is unnecessary following the full review and consultation with industry carried out in 2025. This review resulted in flexibilities being extended and has only recently been implemented.

How robust is the current rate of EV take-up relative to the Government’s targets?

The take-up rate of EVs has been high enough to meet the ZEV mandate targets in its first two years, accounting for flexibilities in the regulation included following manufacturer lobbying. [22] In 2025, Audi, BMW, Mini, Renault, Mercedes and Ford have met or exceeded the headline target with little or no reliance on flexibilities.[23]

The headline trajectory for zero emission sales in the mandate is tempered by a range of flexibilities to ease compliance for manufacturers, such as allowing borrowing against future sales and reducing the emissions of the non-ZEV fleet offered. The real targets for the first two years of the mandate, accounting for flexibilities, have been met in both 2024 and 2025. This means that manufacturers can fulfil their obligations through credit trading, with no manufacturers needing to pay any fines. The full data on credit trading within the Mandate for 2024 will be published by the DfT in March.

The flexibilities are slowly being withdrawn with 2029 the final year where other pathways for compliance such as improved internal combustion engine efficiency gains can be used to meet ZEV mandate obligations. Overall sales will need to increase up to ZEV mandate headline target rates in coming years to prevent a compliance cliff-edge in 2029.

The ZEV mandate has come under significant pressure from some manufacturers that did not make early investments in EVs. This pressure has been exacerbated by a downturn in the overall car market. Car sales, particularly of ICE vehicles, have been sluggish. The industry was hit hard post-pandemic by supply chain shortages and the rising cost of raw materials, leading to the British car industry falling out of the world’s top ten car producing countries.[24]

Recent sales figures, however, reveal an obvious solution: electrification. Year to date sales from August 2025, show that British EVs sales have grown by 26 per cent, with plug-in hybrids growing by 29 per cent and hybrids by 12 per cent compared to the year before.[25] Petrol and diesel cars, on the other hand, have declined by 27 per cent and 12 per cent respectively. The long term decline of diesel vehicles is stark and has been dubbed the “the death of diesel” by New Automotive in a recent report which notes that many filling stations will stop selling diesel within the next decade.[26]

The rise of EVs is similar in Europe, where over half of UK produced cars are exported, with a 34 per cent increase in EV registrations on the year before.[27] In December 2025, the EU sold more new electric than petrol vehicles for the first time ever, according to the European Automobile Manufacturers’ Association (ACEA).[28] Due to ambitious government policy, EV sales in Norway reached 96 per cent of new vehicle registrations in 2025.[29]

Business as usual is not an option for the British car making industry as world markets shift. The future is electric.

Analysis from the CBI suggests that the UK leading the transition could increase the total Gross Value Added (GVA) contribution to the UK economy of the UK automotive sector by 35%, or £16.1 billion, By contrast, slowing the transition this could reduce the UK industry’s economic output by £34.1bn, and see over 400,000 jobs being lost.[30]

The recent Industrial Strategy white paper offers included an ambitious target to raise production by 50 per cent to 1.3 million vehicles a year by 2035 and some welcome extra financial support to help with the transition. However, there were few specifics in the strategy, meaning the industry will have to wait until the Automotive Technology Strategy is published next year for a long term plan for the sector.

Green Alliance recently hosted a roundtable with MPs and stakeholders from manufacturing, trade unions and the NGO community. The overwhelming consensus of the discussion was that the Industrial Strategy had failed to adequately champion the automotive sector and that the early introduction of pay per mile road tax on EVs could jeopardise demand at a crucial moment for the industry. The government needs to determine at its core whether it wants the UK to remain an automotive manufacturer over the next 5-10 years and, if so, take steps to slash energy costs, remove trade barriers and bring in new investment.[31]

It would be a huge strategic mistake for the UK to slow down the transition to cleaner driving, as the European Union is considering. Export orientated economies are continuing to push ahead, with China at nearly 50 per cent EV sales domestically and Vietnam at 40 per cent in the first half of 2025.[32] To be competitive in this global marketplace, the UK needs to supercharge its EV offering. Over the next decade, we'll see vehicles powered and controlled by sophisticated software and electronics, which plays to the strengths of British industry.  

Policy recommendations:

• The government needs to develop a long term strategy to protect the car industry and deliver the next wave of EV innovation.
• Cutting electricity costs for automotive manufacturers and their supply chains is the most urgent immediate step to help British carmakers survive. Ministers should fast track the British Industrial Competitiveness Scheme to move policy levies from electricity bills onto general taxation, rather than waiting until 2027 as proposed. It is also essential that the automotive industry qualifies for this new support, as concerns have been raised about the eligibility criteria in the recent consultation. If this is not possible, the chancellor should provide emergency relief.
• The government should actively pursue a deal with a major foreign electric vehicle investor to base their European operations in Britain.

How effective are existing incentives (such as the Electric Car Grant) in influencing EV take-up, and to what extent might further or different forms of support be required?

The introduction of the Electric Car Grant has stimulated increased interest in EVs and enhanced price competition

The Electric Car Grant (ECG) is a welcome move by the government to support EV demand and domestic manufacturers, while incentivising climate-friendly manufacturing through the eligibility criteria. On Autotrader, EV enquiries have hit record levels since the ECG was announced. Sales of some models eligible for the top tier grant have significantly increased. The ECG has contributed to the continued steady growth of the EV market even if it has not caused an immediate step change in total market share.

Research from New Automotive has found that many manufacturers not eligible for the grants have responded by cutting their own prices, noting “this is good news for car buyers, and may help explain why producers of eligible cars are not seeing growth in market share. Competition has just got tougher.”[33]

We therefore welcome the addition £1.3 billion of funding for the ECG announced in the Autumn Budget, that should enable it to continue to 2028.

It is, however, worth noting that purchase grants for first hand vehicles are not the most efficient use of public money. Analysis suggests around 47,000 additional vehicles might be put on the road each year because of this policy, but a French-style social leasing scheme could, for the same cost, put 93,000 new vehicles on the road.[34]

What are the likely implications of the introduction of Electric Vehicle Excise Duty (eVED) for the wider EV transition, and what factors should guide the Government’s approach to its implementation? What has been the effect of the introduction of VED on zero-emission cars since April 2025?

Electric vehicles are cheaper to run for nearly every driver and will be even after the proposed introduction of a pay per mile charge on for electric vehicles in 2028 announced in the Autumn budget. According to the Energy and Climate Intelligence Unit, EV drivers could still save £1000 a year with a 3p/mile charge.[35]             

Pay per mile (eVED) will be needed in future but risks undermining progress

Green Alliance advocates for road pricing as a necessary future alternative to declining fuel duty revenues. However, the premature introduction of PPM schemes in New Zealand and Iceland saw EV sales drop significantly.[36] EVs will still be cheaper to run under the reported scheme (with home charging), especially as the fuel duty begins to rise again, but the potential damage to consumer confidence is already clear.[37] We have not, however, seen a significant drop in EV sales since the announcement to date.

The incentives for going electric need to remain clear: fuel duty must rise first.

We welcome the Chancellor’s schedule to reverse the 5p fuel duty cut and reinstate the escalator in a way that minimises any potential impact on inflation. Preventing fuel duty from rising in line with inflation for fourteen years has benefited the richest the most, cost an estimated £133 billion in lost tax revenue and substantially increased pollution.[38] Petrol retail spreads, the profit margins of what price drivers pay compared to total retail costs, are averaging 13.3p per litre, double the level for 2015-19 at 6.5p.[39]

We note that the Budget did include several other positive steps on vehicle taxation and EV infrastructure, including:

• Raising the VED “expensive car supplement” threshold for BEVs from £40,000 to £50,000.
• Granting 100% business rates relief for EV-only forecourts and eligible charging points.
• Cutting household electricity prices by 4p/kWh by removing 75% of the Renewables Obligation cost.

Policy recommendations:

• The introduction of eVED should be pushed back to 2030 (from 2028). The ZEV Mandate trajectory sharply rises in 2028/9 and eVED risks dampening sales. By 2030 EVs should be 1 in 5 cars on the road, 80% of new sales, and able to support eVED.[40]

How should the Government support further development of the second-hand EV market?

The government should implement a standardised battery health check for second hand electric vehicles. This will boost consumer confidence and overcome a key barrier in concerns about battery longevity that particularly hamper the second-hand market.

What are the most significant factors affecting consumer confidence in EVs, including purchase and running costs, chargepoint availability, concerns about battery longevity, safety and fire risk, and what are the best steps Government and the sector could take to address them?

The new campaign launched by the government “Get that electric feeling” is a welcome step towards addressing some of the common barriers to EV uptake, highlighting the cost savings, reasonable purchase costs of a growing number of EV models, and the warranties included with EV batteries.

Transport & Environment (T&E) polling data shows that a key perceived barrier for drivers considering an EV is the lack of a fully national network of ultra-rapid chargers across the UK to ensure longer journeys can be made easily, which is often expressed as concern regarding public charging availability, charging times and range anxiety.[41]

The Public Charge Point Regulation 2023 requires 99% reliability of rapid/ultra-rapid chargers and their payment systems.[42] T&E’s analysis shows that the number of comments, per BEV on the road, relating to broken and failed charging attempts have slowly decreased since the regulation's introduction, with failed charging comments per BEV now at 36% of the level seen in 2020. This is positive and shows that the regulation is working. Recent reforms to allow EV owners without driveways to instal a charger at home using permitted development rights to then run a cable from car to home are welcome.

The UK’s public charging network has seen remarkable growth, nearly doubling the number of charge points over the past two years to reach 87,796 electric vehicle charging points across 45,033 charging locations,, with 122,071 connectors as of December 2025.[43] This expansion puts the sector broadly on track to deliver the fourfold increase needed by 2030 to support mass battery electric vehicle (BEV) adoption. However, as noted above, significant regional inequalities remain in the roll out and the government should prioritise supporting regional and devolved authorities in catching up with London.

We welcome reports that the Treasury is looking to reduce public charging costs, including potentially lowering VAT on public charging. Currently, EV drivers spend an extra £85m on VAT when using public chargers compared to the taxation rate for home charging.[44]

Policy recommendations:

• VAT on public charging should be cut from 20 to five per cent, to bring it into in line with off street home charging costs. 
• Capital spend on charger installation should be increased, focused on underserved parts of the country.
• Give tenants and leaseholders the right to pay for and install a home chargepoint.

What further action is required to ensure that the rollout of EV charging infrastructure facilitates transition at the necessary rate?

Maintaining the ZEV mandate trajectory is critical to locking in investment in charging infrastructure, as the mandate gives the best indication of the number of EVs coming onto the road in any given year. Charge UK has shown that the relative instability of the EV policy environment has been a barrier to rollout.[45] The government need to ensure that it does not introduce further uncertainty into the system.

The government could also provide a new source of income for ultra-rapid charging by amending the Renewable Transport Fuel Obligation.

Policy recommendation:

• Include renewable electricity used to charge electric cars in the Renewable Transport Fuel Obligation (RTFO) to support the roll out of ultra-rapid charging in less profitable and underserved areas, at no cost to the Government.

How effectively is the Department for Transport addressing issues in the rollout of charging infrastructure such as affordability, geographic equity, accessibility, administration of funding, and the availability of grid connections?

Overall, the UK has the right amount of public charging capacity, but consumer experience shows improvements are needed. Transport and Environment UK have mapped the regional inequalities of the charging network.[46]

For example, Brighton and Hove have moved ahead with 185 charge points per 100,000 people, while Walsall is at the other end of the spectrum with just 25. The split is not necessarily simply urban and rural, with parts of Scotland, Wales, and Cornwall also delivering. Spending must be targeted to address the worst of these inequities.

We would also refer the Committee to the work of the Public Accounts Committee, which found in 2025 that “the interests of disabled drivers have been left behind in the rollout, with no charge points in the UK currently fully compliant with accessibility standards which DfT itself helped to create.”[47]

What lessons should be learned from other countries' successes or setbacks?

The EU has chosen the wrong path on electric vehicles and risks being left behind

The EU’s former Regulations on CO2 standards required a 100% reduction by 2035, effectively ruling out the sale of petrol, diesel, and hybrid cars from then. The EU commission has proposed weakening the reduction to 90 per cent to allow some polluting vehicles, such as hybrids and ICE vehicles using “alternative fuels” after 2035.

This move will slow the transition to a fully EV fleet in the European Union, keeping millions of European families stuck driving dirtier and more expensive petrol and diesel cars for longer. The changes risk Europe’s car industry falling behind international competition and being stuck producing increasingly obsolete cars. This is why the change is opposed by manufacturers such as Volvo.[48]

It is worth noting, however, that while this sends the wrong signal from politicians to manufacturers, introducing uncertainty and delaying investment decisions, the trend of the EU’s regulation is still to back EVs. Despite this specific concession at least three quarters of new sales must still be EVs in 2035, by which point economies of scale will have further brought down costs and EVs will dominate the market.[49]

Norway provides a positive example

Ninety six per cent of new vehicle registrations in Norway last year were EVs, showing what can be achieved through ambitious government policy.[50] Norway also demonstrates how once a “tipping point” is reached in EV sales the transition can snowball.[51]

There are other EU countries accelerating the EV transition. Denmark saw 68.5% new battery electric sales, the Netherlands 40.2%, Finland 37.2% and Belgium 34.7%. Providing adequate incentivisation for EVs over ICE vehicles can turbocharge sales.[52]

China is a global EV leader

As of 2025, China’s domestic market reached nearly 50% EV sales. Through state subsidisation Chinese vehicles are a significant source of exports, including in the UK.

January 2026

Endnotes