EV demand cools as petrol and diesel rebound ahead of pay-per-mile plan

UK car buyers are shifting away from electric vehicles, with demand for petrol and diesel cars rebounding as EV uptake slows, according to the EY Mobility Consumer Index. In a survey of 1,032 UK motorists planning to buy a new car in the next 24 months, 41% said they would choose a model powered by an internal combustion engine, up from 36% a year earlier, while 19% favored an electric vehicle.

EY said the latest results, drawn from September and October 2025, marked a notable shift from last year when a growing share of buyers leaned toward cleaner options and the market appeared to be closing in on government targets. The biggest deterrent to electrified ownership remained the up-front cost, with 41% of respondents citing high prices as a reason to avoid electrified cars. Other barriers cited included limited range (36%), potential battery replacement costs (30%), and concerns about charging infrastructure (47% said there is a lack of charging stations; 45% flagged long charging wait times; 40% cited the cost of accessing the public charging network).

The EY poll also highlighted a shift in attitudes toward powertrains: two in five respondents remained open to hybrids, but interest in plug-in hybrids and pure electric models lagged behind 2024 levels. The survey noted that EV uptake is still not keeping pace with policy targets, and ministers may need to offer additional incentives to accelerate demand as the decade progresses.

Policy context is evolving alongside consumer sentiment. In the Autumn Budget, the government pledged to extend the Electric Car Grant (ECG) to maintain a price discount of up to about £3,750 off the purchase price of qualifying EVs under roughly £37,000 through the end of the decade. At the same time, the Budget introduced a pay-per-mile levy on EVs, set to begin in 2028 at a rate of 3 pence per mile. The Office for Budget Responsibility estimated the new tax could result in about 440,000 fewer battery-electric vehicle registrations between 2028 and 2030, even as the ECG extension dampens the shortfall to roughly 120,000 fewer registrations.

Industry voices warned that the policy mix could dampen demand for zero-emission cars. A Ford spokesperson said the eVED proposal sends a confusing message to drivers during a fragile transition to clean transport. Polestar’s Matt Galvin, managing director of EV maker Polestar, cautioned that while EV drivers should contribute to road costs, the levy could send the wrong signal and suggested reviewing fuel duties as part of broader road-use reform. The Society of Motor Manufacturers and Traders (SMMT) warned that a new electric-vehicle tax could reduce demand for the very vehicles manufacturers are compelled to sell and could undermine the UK’s investment appeal at a time when the government aims to grow vehicle output to about 1.3 million units by 2035.

November registrations from SMMT showed electric car sales slowing to their lowest point in almost two years, with EVs accounting for 26.4% of new-car registrations, just ahead of 25.1% in November 2024. For the calendar year, EVs represent about 22.7% of new-car registrations, well short of the 28% annual target under the Zero Emission Vehicle mandate. The market remains heavily influenced by cost considerations and the evolving policy landscape. EY’s analysis also highlighted that 19% of respondents favored hybrids, down from 27% in 2024, while 10% preferred plug-in hybrids, which could face additional tax headwinds as the eVED is introduced. PHEVs are expected to be squeezed further by the transition to the per-mile levy alongside an anticipated return to higher fuel duties.

Even as policy uncertainty weighs on new-car demand, the EY survey found that a strong environmental motive still drives some buyers: around 39% of EV aspirants cited environmental concerns as a key factor, while rising penalties on ICE vehicles (about 29%) and higher fuel prices (about 28%) were additional incentives cited by respondents considering electrified options. Among current EV owners shopping for a next vehicle, about 84% said they are likely to buy another EV, a figure broadly in line with last year.

Another notable trend from EY’s poll is the evolving role of where people buy: only 36% said they would prefer to buy from a physical showroom, while 35% indicated a preference to purchase online, signaling a continuing shift toward digital retail channels in the automotive market. Meanwhile, a growing share of buyers expressed a preference for European-made cars (88% among top-three choices) and a relatively small share favored Chinese models (7%), signaling some alignment with regional manufacturing footprints as dealers adapt to policy and consumer preference shifts.

EY UK and Ireland mobility leader Maria Bengtsson said the latest results were surprising in the sense that interest in cleaner options remains meaningful, but cautioned that the pace of EV uptake is still lagging behind legislative targets. She noted that the new mileage-based tax on EVs could prove a barrier to demand and urged ministers to consider additional incentives to accelerate the transition before the end of the decade. The EY study also found that broader macro pressures—such as the cost-of-living squeeze, policy confusion, and uncertainty about whether the 2030 ICE sales ban will be upheld in light of related EU plans—are weighing on vehicle-purchasing intent. Overall, about half of respondents (49%) said they were extremely or somewhat likely to buy a vehicle in the next two years, down from 56% last year and roughly in line with the 32-market average of 50%.

The EY Mobility Consumer Index paints a nuanced picture of the UK’s car market as it grapples with price pressures, charging infrastructure gaps, and a policy landscape that is still taking shape. While the ECG extension offers temporary relief for buyers, the looming EV tax—paired with questions about charging access and range—suggests the road ahead for EVs remains complex. Industry observers say the balance of incentives, road-use charges, and infrastructure investment will likely determine whether the UK can maintain momentum toward its climate and manufacturing goals, or faces a protracted period of slower EV adoption and transition-related challenges.