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Expert weighs in on whether new EV grants will boost UK adoption

Tuesday, August 5, 2025 - 11:57
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Keith Hawes, Director at Nationwide Vehicle Contracts, reveals, “The used EV market is under extreme pressure”

EV fleet adoption, driven by tax-efficient salary sacrifice schemes, continues to perform strongly. However, private consumer uptake remains slow due to concerns over affordability, residual value depreciation and charging infrastructure.

In response, the UK government has announced a £700 million pledge in direct support to boost battery electric vehicle (BEV) uptake, including leased electric vehicles.

However, industry expert Keith Hawes, Director at Nationwide Vehicle Contracts, warns that the latest measures risk unintentionally harming long-term electric vehicle adoption and shares his concerns over the growing fragility of the used EV market.

Industry expert calls for greater used EV support to address the gap

“While the recent government announcement on support for new BEVs is welcome, it did not address the weakening of residual values for used electric vehicles. The leasing industry, which has been the primary investor in BEV uptake, has called for a reduction in VAT from 20% to 10% on used vehicle sales and a £1,500 grant for vehicles under £45,000, yet these measures were noticeably absent.

There’s also concern that the recent government subsidy for new EVs could further erode residual values, cancelling out part of the benefit of the grant. Add to this the upcoming VED charges, the introduction of new Chinese brands likely to be aggressively priced, and the fast pace of technological change, which makes older models less attractive, and it’s clear the used EV market is under extreme pressure.

EV market could be at risk of shrinking by almost a quarter of a million vehicles

As we move towards full implementation of EVs, projections suggest the market could shrink by up to 220,000 vehicles between now and 2027. The private market, which forms the backbone of used vehicle sales, is not showing signs of adopting BEVs at scale. In 2024, only one in ten private buyers chose a new BEV, compared to over 25% of fleet sales and 54% of Business Contract Hire orders driven by Salary Sacrifice demand.

This disconnect is critical. Used EVs currently account for only around 13% of the overall used market, lagging well behind the new market share and well below the 28% target set by the ZEV mandate for 2025. Recent figures show that used EV values dropped again in May as stock levels hit their highest point this year, reversing several months of modest gains.

Without targeted government intervention for the used market, the entire electric vehicle sector risks stagnation, or worse, collapse.”

EV fleet sector is holding strong, yet could see the impact of Vehicle Excise Duty 

Keith shares: “The current set of incentives for fleet EVs is working and doesn’t require major adjustment. There are already highly attractive incentives in place for fleets and their drivers or employees to acquire new BEVs. 

The registration data clearly reflects this. Fleet and business sales are currently at an all-time high, accounting for around 62% of the market, while private sales remain below 39%. This strong performance in the fleet sector has been driven in large part by the uptake of Salary Sacrifice schemes. 

In the Business Contract Hire market, 54% of new orders are for BEVs, and in many of the largest fleets, the BEV mix is now approaching 100%. Employees with access to these schemes, many of whom are within government bodies such as the NHS and local authorities, benefit from substantial tax advantages.

While the upcoming introduction of Vehicle Excise Duty on BEVs may have some impact, there are still a number of incentives in play. These include workplace charging schemes and the newly announced EV subsidy of up to £3,750, which applies to leased vehicles and therefore supports Salary Sacrifice via Business Contract Hire agreements.”

What needs to change to help safeguard long-term EV adoption 

Hawes is calling for a multi-pronged intervention strategy to protect EV uptake in the long term, highlighting that “further support for used EVs would make a real difference.”

Here are three key areas to strengthen the EV market:

  1. Better prices –  Price competitiveness will also play a role, especially as more OEMs, particularly from China, enter the market with a broader range of models and more aggressive discounting.
  2. Confidence in residual values –  Introducing incentives here would encourage funders to take greater risks when setting residual values, which in turn would bring down rental costs and make EVs more accessible. 
  3. Charging infrastructure – Continued development and better access to charging, both for fleet users and private drivers, would provide a much-needed boost to both the fleet and retail market. Infrastructure is still lagging woefully behind. Of the £68 million government allocation for local charging, only £25 million is being directed to help councils deliver on-road and cross-pavement solutions. That simply isn’t enough to give consumers confidence in making the switch.

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