Key takeaways
- Our analysis of data from the Department for Transport (DfT) and Driver and Vehicle Licensing Agency (DVLA) shows that over 2024, 19% of new car registrations were for battery electric vehicles (BEVs), up from 16% the prior year.1 Overall, penetration of BEVs into the car market is low (4% at end of 2024) but will continue to grow.2
- Recent years have seen continued strength in hybrid electric vehicle (HEV) registrations, but growth in plug-in hybrid electric vehicles (PHEVs) has been muted.
- Company registrations have led the uptake of BEVs, driven by favourable government policy settings.
- UK insurers looking to capitalise on the growing electric vehicle (EV) market should position themselves for changing risk profiles as the market matures and government policy continues to evolve.
- Modern BEV technology provides unique opportunities for complementary products across the EV ecosystem and in managing cyber risk. The interconnectedness of EVs can also facilitate a greater connection with customers and guide how they manage risk.
In part 1 of this article, we look at trends in the electrification of the UK car market, using registration data from the DfT.
In part 2, we discuss the risks and opportunities of these trends for UK insurers.
Electric vehicles in the UK: A market in flux
The EV market has been undergoing a rapid transformation, presenting both risks and opportunities for insurers through 2025 and beyond.
Data from the DfT and DVLA shows the overall speed of electrification increasing in the market with different trajectories emerging based on the product, region and by personal or company use. New manufacturers are also continuing to enter the market, leading to an increasingly competitive environment. As the EV market matures and affordability increases (including via the second-hand market), the underlying risk profile of drivers is also changing.
To remain relevant, insurers must navigate this dynamic market with changing customers, technologies, manufacturers and emerging cyber risks.
Definitions: Hybrids, battery electric vehicles and in-between
The DfT classifies cars based on fuel type, and EVs can be broadly considered in three groups.3
- Hybrid electric vehicles, such as the Toyota Yaris Hybrid, have both an internal combustion engine (ICE), powered by either petrol or diesel, and an electric motor. HEVs contain a small battery that charges as the car drives; they do not plug-in to charge. Due to the low battery capacity, these vehicles cannot travel long distances on pure electric power but instead use the battery to optimise overall fuel efficiency.
- Plug-in hybrid electric vehicles, such as the Mercedes Benz E-Class, have a larger battery than HEVs, allowing for a longer all-electric driving range. Once the battery is depleted, PHEVs can revert to their ICE. They can also be driven as a hybrid, using both the ICE and electric motors for efficiency. Due to the larger battery, these vehicles plug-in to external power for charging.
- Battery electric vehicles, such as the Tesla Model 3, are powered by an electric motor only and require charging from external power. BEVs do not have an ICE and therefore are considered zero emission vehicles, unlike HEVs.
After 2030, the sale of new vehicles with ICE will be banned across the UK, with all hybrids banned after 2035—only zero emission vehicles sales will be allowed after this time.4 This positions BEVs as the long-term product in this class, with hybrid models (HEVs and PHEVS) playing a transitional role.
Part 1: Observations on the electrification of the UK car market
DfT data based on registered vehicles shows the current state of electrification in the UK vehicle market. At the end of December 2024, there were 41.7 million registered vehicles in the UK, of which 33.9 million (82%) were cars.5 This article will focus on the car segment.6
New registrations show an increasing uptake of both hybrids and electric cars
In 2024, over 57% of new UK car registrations were hybrids or BEVs, with BEVs alone reaching a 19% share, as shown in Exhibit 1 below.
However, strong growth has continued in the hybrid segment, which has a combined 38% share of new registrations (HEV and PHEV). This is mainly from growth in HEVs, with PHEVs seeing only modest market share growth in recent years.
Figure 1: Number of new EV car registrations and as a percentage of total new car registrations7
Company registrations, not private buyers, are leading the electrification charge
For new company cars registered from 6 April 2020, zero emission vehicles were subject to a favourable 0% company car tax.8 This tax rate has been gradually increasing, and at current policy settings, it will increase to a maximum rate of 5% in 2027/28 for zero emissions cars, 21% for low emissions vehicles (less than 75 g of CO2 per kilometre) and 37% for other cars (more than 75 g of CO2 per km).9
In 2024, approximately 63% of all new car registrations were by companies, as shown in Exhibit 2 below. However, this proportion increases to 82% for new BEV registrations, following a significant increase from 2020 when favourable tax settings came into effect. PHEVs have had consistently high proportions of company ownership, albeit for significantly lower numbers of total vehicles. On the other hand, company ownership proportions for HEVs are similar to other non-EVs, reflecting similar emissions classifications.
Figure 2: Company proportion of new car registrations by fuel type10
While tax settings appear to have had a significant impact on ownership characteristics, it is unlikely to be the sole contributor to this trend. Other contributing factors may include the availability of charging facilities on company premises, more predictable trips on company vehicles within BEV range (and growing as range improves) or other government incentive programmes (e.g. congestion charge exemptions or discounts in London for EVs).
Penetration of electric cars is low overall but increasing quickly
While EVs make up a significant proportion of new registered vehicles, a typical ICE car often lasts over 10 years. Therefore, it will take time for EVs to represent a large share of the overall market.
At the end of 2024, BEVs reached a share of 3.8% of registered cars (1.3 million cars) with the combined HEVs and PHEVs share at 8.7% (2.9 million), as shown in Exhibit 3 below.
Figure 3: Number of EV car registrations and as a percentage of total car registrations11
Regional differences: The south leads the uptake of BEVs
The highest uptake of BEVs is in the south, with the London, South East and South West regions showing the highest levels of uptake, at around 5% of all registered vehicles. The South East is particularly relevant; with both a high number of cars and high BEV uptake, it represents 22% of all registered BEVs in this area. The uptake of PHEVs has a very similar regional distribution to BEVs, albeit at a lower level of uptake.
Looking at HEVs, we see a generally flatter uptake across regions, which may partially reflect the lack of reliance on external charging.
Figure 4: BEVs and HEVs as proportion of all registered cars by region, England and Wales12
Figure 5: Number and proportion of BEVs and HEVs by region (thousands of vehicles)13
Manufacturers are entering the market in an increasingly competitive landscape
At the end of 2020, there were 28 manufacturers who had at least 10,000 registered BEVs cars in the market, with approximately 88% of the share going to the top 10 manufacturers, as shown in Exhibit 6 below.14
Figure 6: Top 10 makes by number of registered vehicles, 2024 vs 202015
By the end of 2024, the landscape shifted, and the manufacturers with at least 10,000 registered cars doubled to 56. The share attributable to the top 10 also shrank significantly to around 70%.16 Over this period, we observe large, established auto manufacturers entering the market with greater BEV volumes (e.g. Volvo and Toyota) alongside newer BEV-focussed brands (e.g. BYD).
The median BEV is between one and two years old
The growing uptake of EVs means a profile of significantly younger vehicles compared to other fuel types. This is shown in the DfT statistics, which reveals almost 30% of the entire BEV car stock at the end of 2024 were less than one year old. This compares to 6% across all fuel types (dominated by petrol cars).17
The median age of all registered cars was 8 to 9 years, compared to 1 to 2 years for BEVs. This shows a potential future trajectory of a long-term mature EV market, should the EV life cycle emerge at comparable levels to ICE vehicles.
Part 2: Impact of EV trends on insurance in the UK
The continued development of the EV market as discussed in part 1 will have implications for insurers looking to position themselves for a changing customer base, as discussed below.
The cost of electric vehicles is continuing to decline, presenting opportunity in a transitioning market
According to UK government guidance, the purchase price premium of a BEV (relative to an equivalent ICE vehicle) has reduced from 50% in 2020 to 40% in 2023. Some forecasts expect parity by the late 2020s.19 Sources such as AutoTrader Group’s Retail Price Index show consistent declines in EV prices since the start of 2023 on a like-for-like basis. Beyond the upfront purchase price, some sources suggest a cheaper running cost to BEVs due to less expense in servicing20 and fuel savings21 when compared to ICE cars.
In this context, insurers should consider their strategy in capturing this transitioning market. Partnerships can help insurers extend their service offerings; for example, Direct Line partnered with Zoom EV to provide a bundle of services (such as public charging subscriptions and home charging equipment discounts) for new EV owners making the switch for the first time.22 Given the high representation of company registrations, insurers may also consider capture of corporate partners or emerging EV rental companies.
The higher historical purchase point for BEVs may have previously limited their purchase to higher income early adopters in cities. However, affordability of BEVs will also change the underlying risk profile over time, with growing accessibility for a wider pool of drivers, such as younger and lower income drivers, and in an expanded regional footprint as charging networks improve.
Regulation and policy are dynamic, affecting the EV market
With EVs considered crucial to achieving the UK’s net zero emissions target, legislators remain active in adjusting policy settings.23 This in turn has significant implications for the underlying EV market and the segments and vehicles insurers may wish to target.
For example, the EU adopted a new emissions standard, Euro 6e-bis, in January 2025.24 This changes the measurement of emissions for new vehicles. Some models of PHEVs expect to see significantly higher measured emissions under this approach, potentially reducing the favourability of their tax treatment.25 While not yet adopted in the UK, which remains on the earlier Euro 6d-ISC-FCM standard, future changes to follow the EU may have significant impacts on this market.26
Beyond company car taxes, government incentives can take several forms, including locally applied policies (such as reduced congestion charges) or adjacent policies (such as solar subsidies), which can reduce charging costs for an individual or company.
Complementary insurance product opportunities in the EV ecosystem
Currently, comprehensive EV motor insurance policies commonly cover damage to charging equipment and liability for charging cables. As the market grows, there will be greater opportunities and risks in complementary products, such as charging infrastructure, which will change exposures beyond motor insurance offerings.
The widespread presence of charging infrastructure may change the underlying insurance risk profile of a property, with additional property damage and liability risks. Charging infrastructure is becoming more mainstream, helped by legislation and government appetite to support the transition. For example, in 2022, as part of a reform to building regulations, additional requirements were added around the installation of EV charge points and cable routes.27
Cyber risk is a significant exposure and an emerging opportunity
Growing interconnectedness of EVs has the potential for cyber risk accumulations. Prior cyber risk incidents have involved access to the vehicle directly (e.g. unlocking cars or starting engines) and charging infrastructure (e.g. stopping charging or changing tariffs), as well as privacy breaches.28 According to cybersecurity firm Upstream, 92% of incidents in 2024 involving automotive or smart mobility vulnerabilities were executed remotely, emphasising the shift from direct proximity threats as seen with traditional motor insurances.29
At present, the largest insurers rely on exclusionary wording to limit liability in these cases, with broad policy exclusions for damage or loss from ‘cyber acts’ (with malicious or criminal intent) and ‘cyber incidents’ (including errors and other failures).
As with cyber risk more broadly, the growing interconnectedness of systems can create complications in liability, with hazy boundaries of culpability between the manufacturer, software provider, vehicle owner and other third parties.
As EVs become more mainstream and cyber risks grow and combine with increasing sophistication and understanding of cyber risk from commercial policies, there may be increased appetite or need for insurers to compete in this space, which will bring its own risks and opportunities. In March 2024, specialty insurer HSB launched a cyber insurance for autos product in the US, which offers coverage across cyberattacks, ransomware and identity theft. This new product potentially signals a shift in appetite to insure this risk.30
Opportunities for greater connection with customers
The increased interconnectedness of EVs provides some unique longer-term opportunities for insurers to enhance their risk reduction offerings to consumers.
At present, insurers may issue alerts for weather events (e.g. hailstorm), allowing people to move their car to safety and avoid loss. Due to the digital native nature of BEVs, there is even more potential for integration of risk mitigation, thereby providing a seamless and valued customer experience, particularly if integrated with manufacturers.
Tesla’s proprietary Safety Score, for example, links key driving behaviours (e.g. hard braking or speeding) and insurance premiums. Similar safety solutions, including real-time alerts, are also employed in fleet telematics by companies such as Lightfoot. There is significant further potential, however, given overall telematics adoption rates in UK fleets of only around 19%.31 As many BEVs are constructed with modern data collection capabilities including detailed location and sensor data, there is significant potential for broader application of this technology to improve safety. Insurers may have a role here in pooling data from manufacturers in devising macro-level alerts in the form of black spot warnings or when challenging driving conditions may be expected (e.g. late at night or in wet and foggy conditions). These may help reduce claims frequency and manage key risks for certain customer segments. In addition, these integrated offerings may present a way for insurers to increase the number of touchpoints with their customers and improve customer retention.
Summary
Over the last five years, the EV market has established a foothold in the UK and is showing signs of continued advancement. However, this growth has not been uniform, and insurers may be strategic in targeting certain segments, particularly as the UK market matures with greater affordability and adoption. Monitoring and aligning with government policy settings will be important, given their significant influence in this market. There are also emerging opportunities for new complementary product offerings, including in the cyber space and in risk management solutions, which may help insurers to better connect to the changing needs of their customers.
1 Gov.uk. (11 June 2025). Table VEH1153: Vehicles registered for the first time by body type, fuel type and keepership (private and company): Great Britain and United Kingdom. Vehicle licensing statistics data tables (‘DfT and DVLA’). Retrieved 14 July 2025 from https://www.gov.uk/government/statistical-data-sets/vehicle-licensing-statistics-data-tables.
2 DfT and DVLA. Table VEH1103: Licensed vehicles at the end of the quarter by body type and fuel type: Great Britain and United Kingdom (n 1).
3 Fuel cell EVs are recorded by the DfT as a separate category but are excluded from this analysis due to small numbers.
4 Gov.uk. (7 April 2025). Phasing out sales of new petrol and diesel cars from 2030 and supporting the ZEV transition: Summary of responses and joint government response. Retrieved 28 August 2025 from https://www.gov.uk/government/consultations/phasing-out-sales-of-new-petrol-and-diesel-cars-from-2030-and-supporting-the-zev-transition/outcome/phasing-out-sales-of-new-petrol-and-diesel-cars-from-2030-and-supporting-the-zev-transition-summary-of-responses-and-joint-government-response.
5 DfT and DVLA. Table VEH1103: Licensed vehicles at the end of the quarter by body type and fuel type: Great Britain and United Kingdom (n 1).
6 The DVLA classify vehicle body types as: cars, motorcycles, light goods vehicles, heavy goods vehicles, buses and coaches, or ‘other vehicles.’ Definitions are available from: Gov.uk. (24 July 2024). Vehicle licensing statistics: Notes and definitions. Retrieved 28 August 2025 from https://www.gov.uk/government/publications/vehicles-statistics-guidance/vehicle-licensing-statistics-notes-and-definitions.
7 DfT and DVLA. Table VEH1153: Vehicles registered for the first time by body type, fuel type and keepership (private and company): Great Britain and United Kingdom (n 1).
8 Gov.uk. (11 March 2020). Taxable benefits and regime for measuring CO2 emissions. Retrieved 28 August 2025 from https://www.gov.uk/government/publications/taxation-of-company-cars-using-carbon-dioxide-emissions/taxable-benefits-and-regime-for-measuring-co2-emissions.
9 Gov.uk. (21 November 2022). Taxation of company cars: The appropriate percentage for tax years 2025 to 2026, 2026 to 2027 and 2027 to 2028. Retrieved 28 August 2025 from https://www.gov.uk/government/publications/income-tax-increasing-the-appropriate-percentage-for-company-cars/taxation-of-company-cars-the-appropriate-percentage-for-tax-years-2025-to-2026-2026-to-2027-and-2027-to-2028.
10 DfT and DVLA. Table VEH1153: Vehicles registered for the first time by body type, fuel type and keepership (private and company): Great Britain and United Kingdom (n 1).
11 DfT and DVLA. Table VEH1103: Licensed vehicles at the end of the quarter by body type and fuel type: Great Britain and United Kingdom (n 1).
12 DfT and DVLA. Table VEH9901: Licensed road using cars and light goods vehicles by local authority, body type, fuel type, CO2 band, keepership, and year of first registration (n 1).
13 DfT and DVLA. Table VEH9901: Licensed road using cars and light goods vehicles by local authority, body type, fuel type, CO2 band, keepership, and year of first registration (n 1).
14 Results based on the make of vehicle. This should be taken as indicative only because some large manufacturers have multiple makes; for example, the Toyota group operates under the Daihatsu, Lexus and Toyota brand names.
15 DfT and DVLA. Table VEH0141b: Licensed plug-in vehicles (PiVs) at the end of the quarter by body type and fuel type, including breakdown of generic models: Great Britain and United Kingdom (n 1).
16 DfT and DVLA. Table VEH0141b: Licensed plug-in vehicles (PiVs) at the end of the quarter by body type and fuel type, including breakdown of generic models: Great Britain and United Kingdom (n 1).
17 DfT and DVLA. Table VEH1111: Licensed vehicles at the end of the year by body type, fuel type and year of first use: Great Britain and United Kingdom (n 1).
18 DfT and DVLA. Table VEH1111: Licensed vehicles at the end of the year by body type, fuel type and year of first use: Great Britain and United Kingdom (n 1).
19 Gov.uk. (10 April 2025). Electric vehicles: Costs, charging and infrastructure. Retrieved 28 August 2025 from https://www.gov.uk/government/publications/electric-vehicles-costs-charging-and-infrastructure/electric-vehicles-costs-charging-and-infrastructure.
20 Rees, S. (22 March 2025). Petrol vs. electric: Which is cheaper to service in 2025? The Car Expert. Retrieved 28 August 2025 from https://www.thecarexpert.co.uk/petrol-vs-electric-servicing-costs-2025/.
21 Walker, C. (14 January 2025). Drivers face £677 ‘petrol premium’ as pump prices rise – analysis. Energy & Climate Intelligence Unit. Retrieved 28 August 2025 from https://eciu.net/media/press-releases/2025/drivers-face-677-petrol-premium-as-pump-prices-rise-analysis.
22 Direct Line Insurance Group. (2 December 2021). Direct Line offers Zoom EV benefits bundle to new EV customers. Retrieved 28 August 2025 from https://www.directlinegroup.co.uk/en/news/company-news/2021/direct-line-offers-zoom-ev-benefits-bundle-to-new-ev-customers.html.
23 Electric vehicles: Costs, charging and infrastructure (n 19).
24 InterRegs. (April 2023). Euro 6e light duty vehicle emissions regulation published. Retrieved 28 August 2025 from https://www.interregs.com/articles/news/244/euro-6e-light-duty-vehicle-emissions-regulation-published.
25 Walters, M. (30 June 2025). Euro 6e-bis emissions standard has major tax implications for PHEVs. Broker News. Retrieved 28 August 2025 from https://brokernews.co.uk/euro-6e-bis-emissions-standard-has-major-tax-implications-for-phevs/.
26 Vehicle Certification Agency. (6 June 2025). GB type approval scheme. Retrieved 28 August 2025 from https://www.vehicle-certification-agency.gov.uk/vehicle-type-approval/gb-type-approval-scheme/light-duty-emissions-approvals-for-gb-type-approval/.
27 Gov.uk. (17 April 2023). Infrastructure for charging electric vehicles: Approved Document S. Retrieved 28 August 2025 from https://www.gov.uk/government/publications/infrastructure-for-charging-electric-vehicles-approved-document-s.
28 Kiley, D. (13 February 2025). Upstream: Auto industry cyber attacks rising. WardsAuto. Retrieved 28 August 2025 from https://www.wardsauto.com/vehicles/upstream-auto-industry-cyber-attacks-rising.
29 Upstream. (2025). Global automotive cybersecurity report. Retrieved 30 July 2025 from https://upstream.auto/reports/global-automotive-cybersecurity-report/#.
30 HSB. (26 March 2024). HSB Introduces cyber insurance for autos. Retrieved 28 August 2025 from https://www.munichre.com/hsb/en/press-and-publications/press-releases/2024/2024-03-26-auto-cyber-insurance.html.
31 Gonzalez, A. (2 July 2025). UK fleet operators lead in telematics adoption: Arval survey. Motor Finance Online. Retrieved 28 August 2025 from https://www.motorfinanceonline.com/news/uk-fleet-operators-lead-in-telematics-adoption-arval-survey/?cf-view.