8:05 am, August 26, 2026
The government’s ZEV Mandate could damage used electric car residual values by forcing manufacturers to discount new EVs heavily.
That’s the word from trade body the Society of Motor Manufacturers and Traders (SMMT), which said that pushing new EV supply ahead of underlying consumer demand risked creating a pipeline of second-hand electric cars whose values could be undermined by the discounts and incentives used to sell them when new.
In an update follow the SMMT’s latest used car market figures, chief executive Mike Hawes said the growth in used EV sales was welcome but warned that the wider transition needed to be sustainable.
‘Pushing new EV supply further and further ahead of underlying demand’ risked creating a used EV pipeline that ‘destroys residual values, causes instability and undermines confidence’, he said.
EVs accounted for more than one in 18 used car transactions between April and June, up from one in 30 during the same period last year.
The overall used car market also passed two million transactions during the quarter for the first time in five years.
However, almost nine in 10 used cars sold in the period were still powered by petrol or diesel, highlighting the scale of the challenge facing the industry as manufacturers are required to increase the proportion of zero-emission cars they sell.
Hawes said this was significantly ahead of underlying consumer demand, which he put at around 10% to 13%, based on research from Autotrader, Deloitte and others.
He argued that the mandate could encourage manufacturers to use discounts to hit their targets rather than waiting for genuine consumer demand to grow.
‘The mandate drives market share, not volume, and it is volumes and margin that industry needs to be profitable – to underpin future investment, model innovation and rollout,’ said Hawes.
The SMMT boss said the problem went beyond the immediate impact on manufacturers, with the consequences potentially filtering through to the used car market.
Heavy discounting of new EVs can reduce the values of comparable cars once they reach the second-hand market, potentially putting pressure on dealer margins and consumer confidence in electric vehicles.
Hawes also warned that the issue could affect investment in future EV models and charging infrastructure if manufacturers were forced to divert billions of pounds into incentives to meet mandated sales levels.
The government is currently reviewing the ZEV Mandate, with a consultation underway on how the UK’s road transport decarbonisation targets should be delivered.
Hawes said the industry remained committed to increasing EV uptake but wanted supply to be brought forward at a pace that reflected genuine demand.
‘We need EV choice that is accessible and affordable for everyone,’ he said. ‘So supply must be delivered at a sustainable pace that doesn’t undermine the total cost of new EV ownership – and without damaging industry’s ability to deliver the very choice which motorists expect.’