Demand for electric vehicles has gone into reverse with a growing share of car buyers reverting to petrol and diesel cars, says a new industry report.

The annual Ernst & Young (EY) Mobility Consumer Index has registered a fall in purchase momentum for EVs while buying intent for traditional combustion engine models has 'bounced back'.

Most worrying for the Government and its intentions to stand by its 2030 ban on sales of new petrol and diesel cars is that the market survey was conducted well before reports emerged that Chancellor Rachel Reeves would levy a pay-per-mile tax on EVs – a move that the motor industry has said could be a killer blow for EV sales.

In the poll of 1,032 UK motorists intending to purchase a new car in the next 24 months, two in five (41 per cent) said their preference would be a model powered by a traditional internal combustion engine (ICE).

This is up from 36 per cent when the survey was carried out in 2024, and more than double the proportion of respondents intending to buy EVs (19 per cent).

The report concluded that if 'EV uptake is still lagging behind legislation targets, more may need to be done to incentivise and accelerate demand among consumers'.

The multinational professional services network said the results from its latest market report contrasts with last year's findings, which highlighted a fall in ICE buying intent, with an increasing proportion of UK consumers (59 per cent) looking to cleaner and greener vehicles, which has now eased to just half.

According to the survey, which was conducted between September and October 2025, expensive upfront purchase costs was the top factor deterring respondents from opting for electrified vehicles, which includes EVs, plug-in hybrids (PHEV), conventional 'self-charging' hybrids and range extenders.

Two in five (41 per cent) cited high prices as the reason they would steer clear of electrified cars.

Meanwhile, limited range (36 per cent) and expensive battery replacement (30 per cent) were the next most prominent reasons among respondents for choosing not to go electric with their next vehicle purchase.

Other hurdles referenced by motorists include a lack of available charging stations (47 per cent), long charging wait times (45 per cent) and the expensive cost to access the public network of devices (40 per cent). 

Ministers will argue that the Chancellor's Autumn Budget pledge to increase funding to the Electric Car Grant (ECG) to retain the price discount scheme – offering up to £3,750 off the RRP of sub-£37,000 EVs – to the end of the decade should help to overcome one of the biggest purchase hurdles. 

However, the announcement of the pay-per-mile eVED tax on electric vehicles in the last month's Budget statement is set to strangle demand for zero-emission cars.

The Office for Budget Responsibility (OBR) has already estimated that the 3p-a-mile additional tax on EVs from 2028 will result in 440,000 fewer registrations of battery cars between now and 2030.

But while the Treasury says the downturn in appetite is likely to be less prominent – due to the extension of the ECG – and that the shortfall will be closer to 120,000 EVs, industry experts have described it as a hammer blow to electric car demand.

Car giant Ford said eVED 'sends a confusing message' to drivers at a time when the EV transition is stumbling.

'Against a hugely challenging market, and compliance targets drifting out of reach, this is the wrong tax at the wrong time,' a spokesperson for the manufacturer told us.

Matt Galvin, managing director of EV maker Polestar, said: 'We have always been clear that EV drivers should contribute their fair share to road costs.

'But [pay-per-mile tax] sends the wrong signal by penalising the very drivers who are accelerating the transition to clean transport. If this is one of the goals then a review of fuel duty which hasn’t changed since 2011, would also be welcome.'

The Society of Motor Manufacturers and Traders (SMMT) said the introduction of pay per-mile EV tax will 'reduce demand for the very vehicles manufacturers are compelled to sell' and warned it will 'reduce further the UK’s investment appeal just as it strives to attract new manufacturing operations given the Industrial Strategy’s ambition to boost vehicle output to 1.3million units by 2035'.

Mike Hawes, the trade body's chief executive, added: 'Introducing a new electric-Vehicle Excise Duty is the wrong measure at the wrong time.

'This new tax will undermine demand, so government must work with industry to reduce the cost of compliance and protect the UK’s investment appeal.'

Registrations figures for November released by the SMMT show that sales of new electric cars slowed to their lowest point in almost 24 months amid rumours of the eVED string coming in the Autumn Budget that month.

Electric vehicle market share hit 26.4 per cent in November, only just ahead of the 25.1 per cent achieved in the same month in 2024.

For the calendar year, EVs make up only 22.7 per cent on new car registrations - which is significantly short of the 28 per cent annual government target set out in the Zero Emission Vehicle (ZEV) mandate.

In the EY poll of car buyers, one in five (19 per cent) respondents indicated that their preference would be a hybrid vehicle, down from 27 per cent in 2024, while one in ten indicated their preference for a PHEV, which was consistent with appetite measured last year.

However, appetite for PHEVs is expected to be stunted significantly due to the arrival of eVED, with plug-in hybrids hit too with a reduced 1.5p-a-litre per mile tax.

It means PHEVs owners will face a double tax from 2028.

The cars – which have both a petrol engine and a supplementary battery offering electric ranges of around 50 miles – will incur fuel duty (set to return to 57.95p-a-litre by 2028) and a 1.5p per mile eVED hit.

Owners have responded angrily to the policy, saying it will be an unfair financial punishment for drivers who have opted to go green. Many told us they plan to replace their PHEVs with traditional petrol or diesel cars before the road pricing tax is introduced in April 2028.

The EY study also found that the impact of the cost-of-living squeeze, confusion around Government policies and uncertainty about whether the 2030 ban on sales of new ICE cars will be upheld in response to the EU's plans to push its own deadline back to 2040 has seen a decline in vehicle buying intent.

Overall, half (49 per cent) of UK respondents said they are either 'extremely likely' or 'somewhat likely' to purchase a vehicle in the next two years, down from last year's figure of 56 per cent, and slightly below the average across the 32 markets surveyed (50%).

Maria Bengtsson, EY UK and Ireland mobility leader, said it had been 'surprising' to see a shift in preferences back towards petrol and diesel vehicles.

'Although EV market share in the UK continues to trail the 28 per cent ZEV mandate target, these sentiment figures shouldn't be a major cause for concern and there are still reasons for optimism.

She said the new mileage-based tax on EVs 'could prove a barrier to demand' and with uptake 'still lagging behind legislation targets', ministers would seriously need to consider introducing more incentives to accelerate demand in the run-up to the end of the decade.

For those who are still considering buying an EV, they told EY that the biggest driver was a growing concern about the environment. 

Four in five (39 per cent) who intend to buy an EV in the next two years citing this as their motivation. 

Rising penalties on ICE vehicles (29 per cent) and escalating fuel prices (28 per cent) were the other key factors encouraging people to purchase an EV.

Mirroring other recent reports, EY also found that a significant proportion (84 per cent) of current EV owners in the market for a vehicle said they are likely to buy another, similar to last year's figure (88 per cent).

Limited demand for Chinese cars and traditional showrooms

The study also suggested that drivers are still not fully convinced by the arrival of new Chinese brands - which is somewhat in contrast to recent sales figures.

The survey found that 88 per cent of respondents said a European-made car was among their top three preferences, up significantly from 63 per cent when the poll took place last year. 

Whereas only 7 per cent of drivers had a Chinese model in their top three choices. 

The report also showed the decline in interest in buying cars from traditional dealerships. 

Just 36 per cent of respondents indicated their preference to buy from a physical showroom, down from 53 per cent in 2024. 

Meanwhile, 35 per cent said they would opt to purchase online, up from 33 per cent in 2024.