Ensuring a successful transition to electric vehicles

The background

• The UK’s transport sector is the highest emitting sector in the UK, with cars, taxis and light vans accounting for 70% of this.^[1] Road transport electrification is therefore central to both meeting climate targets and delivering the wider low-carbon energy transition.
• The Zero Emission Vehicle (ZEV) Mandate is the key policy aiming to tackle road transport emissions in the UK. It requires manufacturers to sell an increasing share of zero-emission vehicles, with 80% of all new car sales required to be zero-emission by 2030, rising to 100% of new car and van sales by 2035.^[2]
• This policy has provided a clear and stable framework which has allowed the energy sector to plan and invest in the anticipated surge in zero-emission vehicles, underpinning billions of pounds of investment in grid upgrades, innovative customer offerings, and broader electric vehicle (EV) supply chains.
• There have been promising signs of success under the Mandate. In 2026, the UK reached a milestone of two million EVs on the road, and new electric cars are now cheaper than their petrol and diesel equivalents for the first time.^[3],[4] This reflects growing consumer confidence and increasing demand for zero-emission transport.
• Alongside EV adoption, UK public charging infrastructure has expanded at pace, complemented by increasing access to home and workplace charging. In 2025, the number of ultra-rapid chargepoints increased by 40% year-on-year.^[5]
• As the phase-out of new petrol and diesel vehicles approaches, sustaining this momentum will be critical to maintaining confidence in the transition among drivers, businesses, and investors, and to supporting continued investment in clean technologies in the UK.

The challenge

• With EV manufacturing targets set to increase significantly over the coming years, policy support is needed to ensure industry can meet this challenge. This requires making the switch to electric vehicles easier and more attractive, stimulating demand and thereby supporting domestic manufacturing and supply chains.
• However, high electricity costs affect the economics of the transition, with the UK facing some of the highest industrial and commercial electricity prices in Europe.^[6]
  The UK risks missing out on £250bn in additional economic output over the next 10 years without strategic reforms to high electricity costs.^[7]
• These costs affect both supply and demand for EVs. They increase costs for manufacturers investing in electrification, making UK manufacturing less competitive globally. They also reduce the cost savings available to drivers who rely on the public charging network.
• There is also a risk that the UK will not be included within the EU Industrial Accelerator Act, which could create barriers to trade key low-carbon technologies and disadvantage UK manufacturers operating in European markets.  
• Drivers relying on public charging pay 20% VAT, four times the rate applied to home charging. This results in a ‘no-driveway penalty’ between customers who can charge at home and those who rely on public charging. 
• To ensure driver trust in the transition, the UK needs a widespread charging network so drivers can charge when and where they need.

What’s the solution?

• The Government should avoid any weakening of the Zero Emission Vehicle (ZEV) Mandate.The ZEV Mandate provides signals to investors that clean technologies are the way forward, underpinning investment in electric vehicles and their supporting charging infrastructure. Policy certainty will help to ensure that the UK remains a competitive market for clean transport investment.
• To support UK manufacturing and ensure the successful delivery of the ZEV Mandate, the Government should take action to lower non-domestic electricity costs through energy bill rebalancing.^[8] This would strengthen the UK’s competitive manufacturing industry, attracting jobs and investment into clean technologies and their supporting supply chains. While current proposals appear promising, the UK should also be included in the EU’s Industrial Accelerator Act to ensure automotive manufacturers have easy access to European markets, encouraging investment.
• Equalising VAT on public charging would help to create a fairer charging system for drivers without access to off-street parking, ensuring that the benefits of EV ownership are accessible regardless of where people live, as well as providing a cost incentive to encourage drivers to choose electric.
• The Government should strengthen the business case for charging infrastructureby introducing low-carbon electricity into the biofuel credit trading scheme (Renewable Transport Fuel Obligation). This would create a market-based mechanism to support investment in charging infrastructure, strengthening the commercial case for chargepoint deployment in the UK.
• To ensure a widespread charging network across the UK, the Government should swiftly and strategically allocate the £600 million announced in the Autumn Budget for public EV charging, ensuring funding reaches priority locations and helps to address regional disparities in chargepoint provision. Grid connections should be strategically planned and future-proofed to account for the growth of EVs, including for the emerging eHGV market.^[9]
• The Government should maintain incentives for drivers to switch until zero-emission vehicles become firmly established in the mass market and new electric car sales reach 80%. Financial incentives remain an important factor in helping drivers choose EVs, not just for early adopters, but for the wider public as well. As the market matures, the focus should be on refining and targeting support rather than removing this support before those who need it the most are able to access it.

[1] Department for Transport (2025) Greenhouse gas emissions from transport in 2023

[2] Department for Transport (2025) Updates to the Vehicle Emissions Trading Schemes (VETS) Order 2023

[3] SMMT (2026) UK new car market breaches two million as almost one in four buyers go electric

[4] Autotrader Group (2026) New electric cars now cheaper than petrol on average for the first time says Autotrader

[5] ZapMap (2026) EV charging statistics 2026

[6] Energy UK (2025) Reducing non-domestic electricity prices to drive economic growth

[7] PwC (2026) The £250bn case for a national energy plan

[8] Energy UK (2025) Reducing non-domestic electricity prices to drive economic growth

[9] Energy UK (2025) Driving electrification in the road freight sector