UK car sales increase in April as two millionth EV arrives; Reeves and Bessent row over Iran war criticism
The UK new car market roared back to life in April, recording its strongest performance for the month since 2019 as registrations jumped 24.0% year-on-year. According to the Society of Motor Manufacturers and Traders (SMMT), 149,247 new cars were registered, a sharp rebound from April 2025 when new vehicle tax increases stifled demand. Growth was broad-based: fleet sales rose 26.8%, private retail deliveries increased 20.2%, and business sector registrations climbed 15.0%.
April also marked a milestone for the electric vehicle transition, with the registration of the UK’s two millionth battery electric car (BEV). The SMMT described the figure as a “market milestone”, while BEV registrations surged 59.1% compared with the same month last year. Plug-in hybrid registrations rose 46.4% and hybrid electric vehicles were up 18.8%, meaning electrified cars now account for more than half — 53.2% — of the market. Petrol car sales increased 8% and diesel dropped 1%.
Despite the strong showing, the SMMT has revised down its forecast for battery-powered cars’ share of the market this year to 26.8%, from an earlier estimate of 28.5%, “following an underperforming first quarter”. Year to date, BEVs represent just 23.1% of the new car market, well short of the 33% required under the Zero Emission Vehicle (ZEV) Mandate. The SMMT now projects that even by 2027, BEVs will only hold a 32% share — leaving a persistent gap of around six percentage points against the mandate target.
Why the SMMT is worried
The industry body is sounding the alarm over the mounting headwinds facing the EV transition. Mike Hawes, SMMT chief executive, said: “April’s rebound is welcome, but underlines just how significantly fiscal changes can influence the market. Two million electric car registrations is a considerable milestone to celebrate, although natural demand is still well below the level demanded by the mandate. The mounting cost of compliance threatens to limit consumer choice, overall decarbonisation and the sector’s competitiveness so the need for a rapid review of the transition to align policy with market realities is unchanged, else Britain’s attractiveness as a vehicle market and manufacturing hub will be put at risk.”
The SMMT’s concern centres on a toxic mix of inflation, higher energy prices and the deepening cost-of-living crisis. While the jump in energy costs since the Iran war began has boosted interest in EVs — drivers seeking to shield themselves from rising petrol prices — the broader economic fallout is hitting household budgets hard. UK CPI inflation rose to 3.3% in March, with motor fuel prices the biggest contributor. Food price inflation stood at 3.7%, and analysts warn that by the end of 2026 food prices could be 6-7% higher. Petrol prices alone added 0.7 percentage points to headline inflation in April.
The background of geopolitical turmoil is intensifying the pressure. The closure of the Strait of Hormuz has driven oil prices to multi-year highs, and UK natural gas futures have nearly doubled since the conflict began. Britain’s long-term borrowing costs have surged, with the yield on 30-year government bonds hitting 5.76% — the highest since 1998 — while 10-year yields have risen above 5% for the first time since 2008. Analysts at ING have warned that the spike in bond yields is partly due to inflation but also reflects political uncertainty ahead of the 7 May local elections, with speculation that Prime Minister Keir Starmer’s position could weaken. The City fears that a change in leadership might loosen the government’s commitment to fiscal rules, further unsettling markets.
Mortgage affordability has already reached its tightest level since 2008, with UK Finance reporting that the average homebuyer spent 21.3% of gross income on repayments in 2025. Regional disparities are stark: borrowers in North Norfolk and Hillingdon spend more than a quarter of income on mortgage payments, while the top ten least affordable areas are concentrated in the London commuter belt. Scotland accounts for seven of the ten most affordable local authorities. The Bank of England has indicated it cannot shield households from energy cost increases, and living standards are set to worsen.
Industry experts believe this economic squeeze is pushing more buyers toward EVs, but caution that natural demand remains fragile. James Hosking, managing director of AA Cars, said: “Persistently high fuel prices, driven in part by ongoing tensions in the Middle East, are continuing to influence consumer decisions. That’s helping to accelerate interest in electric vehicles, as drivers look for more certainty over running costs. For many, the appeal of EVs is no longer just environmental, but increasingly financial.” Colin Walker, head of transport at the Energy & Climate Intelligence Unit, added: “With prices at the pump rising as a result of war in the Middle East, it’s no surprise to see EV sales jumping 59% in April. Drivers are voting with their feet seeking to shield themselves from these sudden jumps in the oil price, and save hundreds — even thousands — of pounds a year in running costs. Just recently Autotrader pointed out that EV sticker prices are now cheaper on average than petrol cars.” Indeed, Autotrader’s Ian Plummer noted that April marked two consecutive months where the average new EV price sat below petrol, ending the month with a £455 price gap, up from £296 in March. He attributed the overall market positivity to “higher levels of competition from new brands entering the market, a continued surge of exciting new launches — as well as enhanced consumer offers”.
Jamie Hamilton, automotive partner at Deloitte, observed that rising fuel prices continue to encourage the switch to EVs and expected this momentum to remain strong while fuel costs are high. But he stressed the need for “continued collaboration between manufacturers and policymakers to address consumer concerns about affordability, incentives, and charging infrastructure”.
The SMMT has nevertheless revised up its total new car registration forecast for 2026 to 2.093 million, from 2.048 million in January, reflecting the April bounce. But the fundamental warning from the industry remains unchanged: without a rapid review of the ZEV Mandate to bring targets in line with market realities, the UK risks undermining the very decarbonisation it seeks to achieve and damaging the competitiveness of its automotive sector.
