Car makers are offering record discounts on new electric vehicles in a desperate bid to invigorate demand as binding end-of-year sales targets loom, data suggests.
The Zero Emission Vehicle (ZEV) mandate, introduced by Government this year to force manufacturers to increase their share of EV sales from now until 2030, threatens fines of £15,000 per electric car below the required quota.
And some car companies falling short of this year's threshold are slashing prices by amounts similar to the financial penalties to shift more stock, according to data supplied by car sales platform Auto Trader.
Additional market analysis by valuations experts Cap Hpi has also found the price of new petrol and diesel models has accelerated at a faster rate than EVs in the last 12 months as car makers look to launch more affordable battery vehicles.
The biggest discount of all in percentage terms is on the DS3 Crossback E-Tense - it usually retails at an average price of £37,862 but was selling last month with 36 per cent off.
It means the average price paid in October was closer to £23,345, which is a saving of £14,517.
The biggest EV model discount seen at the same point last year in comparison (Vauxhall Corsa-e) was a far slimmer 22 per cent, Auto Trader said.
As for the biggest cash saving on an electric car in October 2024, the Jaguar I-Pace was sold new with the most sizable discount.
The luxury electric SUV retails on average at £78,331 but was sold in October for £62,038. This is a 21 per cent discount, which works out at a saving of almost £16,300.
| Make and model | Average Discount (%) | Average RRP | Average price after discount | Average saving (£) |
|---|---|---|---|---|
| DS3 Crossback E-Tense | 35.7% | £37,862 | £23,345 | £14,517 |
| MG5 EV | 34.2% | £33,151 | £21,813 | £11,338 |
| MG ZS EV | 30.1% | £33,243 | £23,237 | £10,006 |
| DS3 E-Tense | 30.1% | £41,320 | £28,883 | £12,437 |
| Peugeot e-2008 | 26.5% | £36,548 | £26,863 | £9,685 |
| Citroen e-C4 X | 23.6% | £35,872 | £27,406 | £8,466 |
| Citroen e-C4 | 23.3% | £36,111 | £27,697 | £8,414 |
| Jaguar I-Pace | 20.8% | £78,331 | £62,038 | £16,293 |
| MG4 EV | 20.5% | £32,358 | £25,724 | £6,634 |
| Vauxhall Mokka-e | 19.8% | £37,809 | £30,322 | £7,487 |
| Source: Auto Trader |
Auto Trader's own analysis found that 70 per cent of EVs on sale in October had some level of discount applied.
This is a lower percentage than internal combustion engine (ICE) models, with 76 per cent of petrol, diesel and hybrid cars sold at lower-than-advertised prices.
However, the average size of discounts on EVs is higher, at 12 per cent compared to just 8 per cent for ICE.
Price cuts like these are among a variety of tactics being employed by car manufacturers to meet the ZEV mandate's requirements, as exclusively revealed by This is Money earlier this year.
And heavy discounts are likely to continue into the coming years due to the binding sales targets.
What is the ZEV mandate and why is it forcing down EV pricing?
For mainstream car makers, electric cars need to make up 22 per cent of all sales in 2024. Brands selling fewer than 1,000 ZEVs a year are exempt from the rules.
However, discounts on EVs, which typically have RRPs around £5,000 to £10,000 higher than their petrol equivalents, are likely to stay for some time because the mandate's thresholds increase each year from now until the end of the decade.
In 2025, brands need to up their EV share of sales to 28 per cent and the year after the threshold rises to a third (33 per cent).
By 2028, more than half (52 per cent) of all models sales need to be zero emissions.
For 2030, the requirement is for 80 per cent of all new car registrations by brand to be zero emission EVs, The remaining 20 per cent allowance will only be for some types of hybrid car as the Labour Government has accelerated the ban on new petrol and diesel models to the end of the decade.
The ZEV mandate works on a credit-based system where manufacturers are awarded or stripped of credits if they overperform or underperform on the annual targets.
Brands can choose to bank these credits for future years if they’re needed or can be sold to underperforming brands who need them to avoid fines.
Conglomerates, like Volkswagen Group and Stellantis, can use credits from one brand under its umbrella to help another worse performing other brand it owns.
But manufacturers also earn credits for sales of low emission cars, such as plug-in hybrids.
If a car maker beats their CO2 target (which is set individually for each brand) by reducing their CO2 emissions, then they can, for the first three years, convert this breathing room into ZEV credits at an exchange rate.
According to the Society of Motor Manufacturers and Traders, EVs accounted for 20.7 per cent of all passenger car registrations in October.
This is likely a result of the discounted prices seen above - but also car makers withholding the availability of new petrol and diesel models to manipulate the numbers in their favour.
Looking at 2024 so far, EV market share is just 18.1 per cent - almost four percentage points shy of the ZEV mandate's 22 per cent threshold.
With just two months of the year left to hit the target, it is no surprise that experts are predicting more price cuts before the end of the year.
A Department for Transport spokesperson told This is Money: ;With a market share of almost 21 per cent in October, industry figures show the UK is now the second largest zero emission vehicle market in Europe.
'We will continue to support industry and consumers to make the switch, with over £300million announced in the Budget to support uptake and £2billion confirmed to support the domestic automotive manufacturing sector.'
Some car makers slashing EV prices despite meeting ZEV targets
Other brands found to be slashing new EV prices dramatically last month includes Peugeot, Citroen and Vauxhall.
These three brands, along with DS, all fall under the Stellantis umbrella, which is also owns Fiat, Jeep and Maserati.
Auto Trader's figures show the DS3 E-Tense was sold in October with 30 per cent (£12,400) discounts, while the price paid for new Peugeot e-2008s was 27 per cent (£9,680) down on the average retail price.
Prices for new versions of Citroen's e-C4 and e-C4X were also slashed by 24 per cent (£8,500) and 23 per cent (£8,400) respectively in October, while customers paid 20 per cent (£7,500) less than the average RRP for a Vauxhall Mokka-e.
These cuts come as Stellantis is teetering close to the 22 per cent EV sales share required in 2024.
According to NewAutomotive's 'Electric Car Count' report, 19.9 per cent of Stellantis sales this year have been electric. However, inclusive of low-emission vehicle credits, it is just fractionally short of meeting the government's required threshold of 22 per cent.
But there are other brands identified by Auto Trader as drastically slashing EV prices that are well ahead of the mandated 2024 target.
Chinese maker MG is offering big EV discounts right now, according to Auto Trader.
Both its MG5 and MG ZS electric cars are sold with around a third off the usual RRP in October.
The MG5 EV estate retails at an average across trim levels at £33,151. However, the online car sales platform says they were sold last month for an average of £21,813, which is over £11,300 (34 per cent) off.
For the ZS crossover, prices were slashed by 30 per cent in October, discounting the average RRP of £33,243 down to £23,237, equating to £10,000 off.
The MG4, Britain's second best-selling EV of 2023, is also sold at prices discounted by 21 per cent, which slashes £6,600 off the average RRP.
With over a quarter (27 per cent) of MG's UK new car sales being EVs, according to the Electric Car Count, its parent company, SAIC, is theoretically almost adhering to the ZEV mandate's requirement for 2027.
It instead suggests MG is discounting to stay competitive in the market.
Ian Plummer, Auto Trader's commercial director, told This is Money that 'many car makers are using significant financial incentives to increase demand for electric vehicles' and the level of discounting we’re seeing now 'makes it possible for many more consumers to make the switch'.
And Ian believes plenty of drivers will be tempted to go electric if prices are low enough - though manufacturers are likely to take a hit.
'We’ve seen it time and time again – when they are affordable, people flock to buy EVs,' he added.
'With government mandated sales targets only set to increase, it’s likely these discounts will continue.
'But, for those car makers relying on this tactic to hit the targets, it’s going to be very painful.
'They are going to be selling EVs at a loss in many cases and they will have to arbitrage those losses with the profits they can still make on their diesel and petrol vehicles.'
Car makers not just discounting; they're launching cheaper EVs
While discounts on electric cars are set to remain if brands are to adhere to the ZEV mandate, there is evidence of manufacturers also bringing more affordable EVs to market.
The sub-£15,000 Dacia Spring EV was launched earlier this year and has been followed by a string of less-expensive battery cars.
This includes the £16,000 Leapmotor T03, Citroen's £21,990 e-C3 and January's arrival of the £23,500 Hyundai Inster.
And the emerge of more attainably-priced EVs - and the recent disappearance of some cheaper combustion engine cars, like the Ford Fiesta and VW Up - is starting to have an impact on the market.
An influx of cheaper battery models from China is also driving down the average EV RRP.
Last year, the average new petrol car price increase was £2,134, while for diesels it was £2,043. However, EV prices rose most, by £2,753 on average.
But it's not the same story in 2024.
Changes to the market has seen the average new petrol car price rise £1,876 (diesels £1,221), but electric vehicle prices have accelerated slower by just £1,159.
Cap Hpi, which specialises in valuations across the automotive sector, says that on average, annual EV price increases are slowing more (3.91 per cent) than their petrol (1.28 per cent) and diesel (1.66 per cent) vehicle counterparts.
Matthew Freeman, managing consultant at cap hpi, said this is due to the EV market experiencing a 'notable shift in pricing dynamics' due to an expansion in 'consumer options with a growing array of affordable EVs'.
He told This is Money: 'We expect this to continue, bringing EV prices closer to parity with their traditional ICE counterparts.'
However, manufacturers are also 'responding to economic conditions' by 'implementing more price reductions and offering extended financing options,' he explained.
'These strategies lower the average price of new vehicles, making them increasingly accessible and attractive to a wider range of consumers. This shift not only benefits potential EV buyers but also those considering petrol and diesel vehicles too.'
