The UK's production of fully electric and hybrid models recorded the first monthly increase of the year in July, up 6.8% to 25,678 units, according to the SMMT.
Electrified models accounted for more than four in 10 cars built in July, up from around three in 10 a year ago.
Overall, UK vehicle production fell -11.6% in July to 63,655 units. The decline reflects weaker exports, down -15.9% to 47,377 units, as well as earlier scheduling of routine summer maintenance shutdowns at some plants, the SMMT says.
Year to date, UK factories have turned out just under 450,000 cars and CVs, down -8.1% on the same period in 2025, reflecting model changeovers, the closure of a plant last year, and continued trade and investment uncertainty. Even so, the latest independent forecast expects UK car and light vehicle output to remain broadly stable in 2026, at 740,000 units, before growth resumes in 2027.
The SMMT says that output could still reach one million units by the turn of the decade, but only if the UK addresses its competitiveness and secures fresh model investment. Government’s recently launched ZEV Mandate review is welcome, providing an opportunity to make meaningful reforms to the regulation that, with stronger market enablers, would help reduce the high cost of selling EVs in the UK, which is currently a major deterrent for global investors.
Reform of industrial energy costs is also needed as, despite the forthcoming British Industrial Competitiveness Scheme (BICS), they will remain some 60% higher than Europe’s. At the same time, government must address the double threat to UK-EU automotive trade posed by the European Commission’s ‘Made in the EU’ proposals, which could make UK-produced vehicles uncompetitive in European markets, as well as the tougher rules of origin requirements under the EU-UK TCA – the Brexit deal – which come into force in January. Unless urgent action is taken by both sides, there is a serious risk to cross-Channel auto supply chains and an €80 billion-a-year trading relationship.
Mike Hawes, SMMT chief executive, said: "July’s figures underline the intense pressure under which UK vehicle manufacturers are currently operating. Although the negative performance is exacerbated by shutdown calendarisation and model changeovers, it is being compounded by weaker overseas demand and fierce global competition.
"The rise in electrified vehicle production is encouraging, but long-term success depends on making the UK a more competitive place to make and sell vehicles. Meaningful and urgent reform of the ZEV Mandate, reduction of the UK’s sky-high energy costs and negotiations to safeguard free and fair trade with our largest and closest export market are essential to put UK automotive manufacturing back on a path to growth."
