Car makers have slashed their forecast for electric car sales this year amid an ongoing slowdown in demand.
The Society for Motor Manufacturers and Traders (SMMT) now predicts electric vehicles (EVs) will account for 18.5pc of the new car market in 2024, down from an earlier prediction of 19.8pc.
EV registrations surged higher in July but sales to private consumers continued to slump.
In figures published on Monday, the SMMT also revised down its forecast for the 2024 new car market as a whole, from 1.984m vehicle sales to 1.968m.
Within that estimate, the projected number of EV sales has fallen from roughly 393,000 vehicles to 364,000.
Mike Hawes, chief executive of the SMMT, said the figures still represented annual growth but warned that weakening demand for EVs among private consumers – despite heavy discounting by car makers – remained the industry’s “overriding concern”.
Car makers have been given legally-binding targets in Britain to ramp up sales of EVs, but several have called for the tough rules to be matched with financial incentives for consumers amid slower-than-expected demand.
Mr Hawes said: “More people than ever are buying and driving EVs but we still need the pace of change to quicken, or else the UK’s climate change ambitions are threatened and manufacturers’ ability to hit regulated EV targets is at risk.
“Achieving market transition at the pace demanded requires greater support for consumers and action on incentives and infrastructure is needed now.”
Despite the worsening annual forecast, EV sales surged by 18.8pc in July, while petrol and diesel car sales slumped by 5.9pc and 21.9pc respectively.
The market share for EVs during the month also rose to 18.5pc, compared to 16pc a year earlier. However, the strongest growth in sales came from hybrids, which grew by 23pc on a year-on-year basis. Within this, standard hybrid sales grew by 31.4pc and plug-in hybrid sales grew by 12.4pc.
Meanwhile, most new EV sales continued to come from “fleet” buyers such as car rental businesses and white collar workers using company car schemes, the SMMT figures show.
Private buyers have accounted for 19.4pc of EV sales in the first seven months of 2024, down from 23.7pc over the same period last year and half the average for the new car market overall.
Experts have blamed this trend on the price of EVs, which remain more expensive upfront than most petrol, diesel and hybrid cars, as well as a lack of financial incentives for private buyers.
The plug-in grant for private consumers was scrapped in 2022, whereas businesses that buy EVs and employees who lease them through salary sacrifice schemes continue to make tax savings.
At the same time, car manufacturers must meet tough zero emission vehicle (ZEV) mandate rules that were brought into force in Britain this year.
These require 22pc of their sales to be electric this year, rising gradually to 80pc by 2030.
Initially, manufacturers can trade carbon credits and use other mechanisms if they miss their quotas. But this will become harder in later years, with breaches of the mandate potentially resulting in fines of £15,000 for every car over their limit.
Some companies have said they could reduce petrol car sales in Britain to artificially raise their proportion of EV sales, with Vauxhall owner Stellantis warning it may even close its British factories unless the Government waters down the legislation.
Meanwhile, Sir Keir Starmer’s administration has previously vowed to toughen up the rules by bringing a planned ban on new sales of petrol cars back to 2030, after Rishi Sunak delayed it until 2035.
Richard Peberdy, UK head of automotive at consultancy giant KPMG, said many consumers were turning to the used car market to buy EVs amid concerns about depreciation in value.
He said: “The evidence increasingly suggests that accelerating private EV sales may require similar incentivisation, particularly if the Government is going to reinstate the 2030 end to new petrol and diesel vehicle sales.
“While choices in the new car market are improving, EV prices – and the scale and rate of price depreciation when buying from new – remain major barriers to convincing consumers to buy a new EV.
“Subsequently, many consumers that are looking to transition to an EV are deciding that the used EV market is a more attractive way to do that.
“Despite used EV sales growing, the higher rate of stock that is currently coming into the used market is still pushing the price of some models down even further.
“All of this context continues to pose big questions regarding how car makers will meet their [ZEV] mandate targets.”
However, Jamie Hamilton, automotive partner and head of electric vehicles at Deloitte, suggested falling interest rates may also help to rekindle demand, as many people buy new EVs on car finance deals.
Last week, the Bank of England announced its first interest rate cut since 2020.
Mr Hamilton said: “We are seeing some signals in the market that consumer sentiment is rising.”
