The United Kingdom's new car market hit a speed bump in July, with overall registrations falling by 5.0% after two consecutive months of growth. In a market grappling with economic headwinds and policy uncertainty, 140,154 new cars were registered, the weakest performance for the month since 2022 and a significant 10.8% below pre-pandemic levels seen in 2019.
For the electric vehicle (EV) sector, the story was one of mixed fortunes. While battery electric vehicle (BEV) registrations continued to grow, the pace has moderated significantly. BEV sales increased by 9.1% in July, a stark contrast to the blistering 34.6% growth witnessed across the first half of 2025. This slowdown saw BEVs capture a 21.3% market share for the month, up from 18.5% in July last year, but still falling short of the 28% trajectory required by the government's demanding ZEV Mandate.
Industry experts point to one major factor for the cooling demand: buyer hesitation surrounding the newly announced Electric Car Grant (ECG). According to the Society of Motor Manufacturers and Traders (SMMT), the lack of clarity on which specific models will qualify for the discount, worth up to £3,750, has caused many potential buyers to postpone their purchases.
Mike Hawes, SMMT Chief Executive, commented on the situation, stating, “July’s dip shows yet again the new car market’s sensitivity to external factors, and the pressing need for consumer certainty. Confirming which models qualify for the new EV grant, alongside compelling manufacturer discounts on a huge choice of exciting new vehicles, should send a strong signal to buyers that now is the time to switch. That would mean increased demand for the rest of this year and into next, which is good news for the industry, car buyers and our environmental ambitions.”
Tesla's July Slump After June High
The volatility of the current market is perfectly encapsulated by the performance of Tesla. After roaring back in June to lead the UK's EV sales and help secure a record-breaking month for BEV registrations, the American giant saw its fortunes reverse dramatically in July.
According to the latest figures, Tesla registered just 987 vehicles in July, a staggering 59.91% decline compared to the same month last year when it sold 2,462 cars. This performance is a stark reminder of how Tesla's lumpy, end-of-quarter delivery schedule can skew monthly figures. After a triumphant June where the Model Y was the third best-selling car of any type in the UK, the brand finds itself languishing in July. Year-to-date, Tesla has registered 23,708 EVs, a 7% drop from the 25,491 it had sold by the same point in 2024.
Chinese Brands and European Stalwarts Fill the Void
As Tesla faltered, other brands surged ahead, painting a picture of a rapidly diversifying and increasingly competitive EV market. Chinese manufacturer BYD was a standout performer, with registrations rocketing by an incredible 314.58% year-on-year, from 768 units in July 2024 to 3,184 in July 2025. New entrants Jaecoo and Omoda also made an immediate impact, registering 1,915 and 1,874 cars respectively, despite having no presence in the prior year.
It wasn’t just Chinese brands making gains. Several European manufacturers posted impressive figures. Peugeot saw its registrations climb by 33.37% to 6,179 units. Skoda also recorded strong growth of 30.21%, selling 6,772 vehicles, while the popular Cupra brand continued its ascent with a 30.06% increase in sales.
Volkswagen remained the overall market leader for the month, registering 13,452 cars, though this represented a 4.23% dip from the previous year. However, its premium German counterparts had a tougher month, with Audi sales falling by 7.32% and BMW experiencing a significant 18.17% decline. In a particularly stark development, Jaguar recorded zero registrations in July, compared to over a thousand in the same month last year, likely a result of its ongoing transition to an all-electric brand.
MG, another SAIC-owned brand, saw a sales dip of 9.53%, but its year-to-date figure of 48,254 registrations keeps it firmly in the top tier of UK brands.
A Mixed Picture for Hybrids
The hybrid market presented a split personality in July. Plug-in hybrid electric vehicles (PHEVs) had a very strong month, with registrations rising 33.0%. This suggests that for some buyers, a PHEV offers a comfortable stepping-stone to electrification, providing electric-only range for daily use with the backup of a petrol engine.
In contrast, conventional hybrid electric vehicles (HEVs) saw their demand fall by 10.0% to 18,551 units. Despite the ongoing shift to electrification, petrol and diesel vehicles still constituted the majority of sales, accounting for a combined 53.0% of the market. However, their dominance continues to wane, with deliveries for these fuel types falling by 14.0% compared to July 2024.
Outlook Remains Positive Despite Dip
Despite the disappointing July figures, the SMMT expects the market decline to be a temporary blip. The industry body has revised its full-year forecast for 2025 upwards to 1.9 million units. This optimism is based on the anticipated clarification of the ECG and a wave of new models and manufacturer discounts designed to stimulate demand.
Within this forecast, BEVs are expected to achieve a 23.8% market share for the full year, a marginal upward revision. While this would be a record high, it underscores the challenge ahead if the industry is to meet the government's stringent ZEV mandate targets in the coming years.
The July 2025 registration figures serve as a critical snapshot of a market in transition. While the long-term trend towards electrification remains firmly in place, the journey is proving to be sensitive to economic pressures and policy decisions. Furthermore, the competitive landscape is shifting tectonically, with the undisputed reign of Tesla now facing a serious, multi-fronted challenge from ambitious Chinese brands and resilient European incumbents. The race for EV dominance in the UK has never been more intense.
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