Joint demand, competitive demand, derived demand, composite demand, joint supply and competitive supply, each drawn as a shift in a second market: electric cars against petrol cars, public charging and lithium, with cross elasticity to measure the link.
In 2025 the UK registered 2,020,520 new cars, the first time past two million since 2019. Of those, 473,340 were battery electric: 23.4%, almost one in four, up from 19.6% in 2024. Manufacturers spent about £5.5bn on discounts, around £11,000 a car, to get there, because the Zero Emission Vehicle mandate required 28% in 2025 and requires 33% in 2026. Petrol’s share fell by nearly six points to 46.4%. By July 2026 the electric share had reached 27.5% and the two-millionth electric car was on the road.
Every one of those cars is a decision not to buy a petrol one. Every one needs somewhere to charge, a battery with lithium in it, and a mechanic trained to service it. And every one uses less petrol.
How does a change in one market ripple into others, and in which direction?
Source: Society of Motor Manufacturers and Traders, new car registrations, full year 2025 (6 January 2026) and July 2026.
Each link is drawn as a shift of demand or supply in the second market, caused by a change in the first.
In 2025, 473,340 new electric cars were registered in the UK: 23.4% of all new cars, up from 19.6% the year before.
Think about three other markets: new petrol cars, public charging points, and the lithium that goes into batteries.
As demand for electric cars rises, what happens to demand in each?
Petrol cars are a substitute, so demand for them falls. Chargers are a complement, bought alongside the car, so demand rises. Lithium is an input, so its demand is derived from the demand for the cars. One change, three markets.
Start in the electric car market. Grants, cheaper models and the mandate pushing dealers to sell raise demand from **D1** to **D2**. The equilibrium moves from Q1 and P1 to Q2 and P2: more cars sold, at a higher price than otherwise. That is the change. Now follow it into three other markets.
Check: The Electric Car Grant and manufacturer discounts raise demand for new electric cars. On the left diagram this is:
More cars are demanded at every price. Supply is unchanged, so the equilibrium moves up along S to a higher price and quantity.
Competitive demand. Petrol cars do the same job, so each electric sale is a petrol sale lost. In the right-hand market demand shifts **left** to D2: at the old price there is a surplus, the price falls and sales fall to Q2. Petrol’s share of UK registrations fell by nearly six points in 2025. The link is a demand shift, in the opposite direction.
Check: Electric and petrol cars are substitutes. As electric car sales rise, the demand curve for new petrol cars:
Buyers who switch to electric leave the petrol market. At every petrol-car price, fewer are wanted.
Joint demand. Chargers are used together with the cars. Demand for public charging shifts **right** to D2: higher price per kilowatt-hour and more sessions, Q2. The higher price and profit then draw investment into new chargers, which in the longer run shifts supply right as well. Complements move in the **same** direction as the first market.
Check: Public chargers are a complement to electric cars. As electric car sales rise, in the charging market:
The two are in joint demand: more cars on the road means more charging sessions wanted at every price.
Derived demand. Lithium, cobalt, battery factories, electricians: demanded because the cars are demanded. The lithium diagram looks like the charger one, demand shifting **right**, but the reason differs: lithium is an input, not a companion good. Labour is the biggest derived demand of all: every wage in a car plant depends on demand for cars.
Teacher tip: In an exam, name the link: “chargers are in joint demand with electric cars, so demand for charging shifts right”. The diagram of a complement and of an input look identical; the words are what earn the analysis marks.
Check: Lithium is bought by battery makers because people buy electric cars. Its demand is:
Nobody wants lithium for itself; demand for it comes from the demand for the batteries and cars it goes into.
Two more links. Composite demand: lithium is also wanted for grid storage and phones, so car makers’ extra demand raises the price for everyone. Joint supply: a refinery making petrol also makes diesel, so falling petrol demand reaches the diesel market. Competitive supply: a factory floor used for electric cars is not available for petrol ones.
Check: Lithium is also wanted for grid batteries and phones. If car makers buy more, the other users face:
When one good serves several uses, extra demand from one use raises the price for all and leaves less for the rest.
Petrol car demand is shifted right, as if petrol cars were a complement. They are a substitute: buyers who go electric leave the petrol market, so demand shifts left and price and quantity fall.
Using diagrams, explain how a rise in demand for electric cars affects the markets for petrol cars and for public charging points, and evaluate how large these effects are likely to be.
A rise in demand for electric cars, from grants, cheaper models and the Zero Emission Vehicle mandate, shifts the demand curve for electric cars right from D1 to D2. At the old price there is excess demand, so price and quantity rise to P2 and Q2: in 2025 electric cars reached 23.4% of UK registrations.
Petrol cars are in competitive demand with electric cars: they do the same job, so buyers who switch leave the petrol market. On the petrol-car diagram demand shifts left from D1 to D2. At the old price there is a surplus, so the price falls and quantity falls to Q2. Petrol’s share of registrations fell by nearly six points in 2025.
Public chargers are in joint demand with electric cars: each new car adds to the number of charging sessions wanted at every price. On the charging diagram demand shifts right, raising the price per kilowatt-hour and the quantity. The higher profit then draws investment into new chargers, shifting supply right over time and bringing the price back down. The same logic gives derived demand for lithium, batteries and trained mechanics.
**However,** the size of each effect depends on elasticities and time. If the cross elasticity between petrol and electric cars is low, because many buyers are not yet choosing between them, the leftward shift is small; and petrol-car makers can cut prices, so part of the lost demand returns as a movement along the new curve. If charger supply is price elastic, extra demand shows up mostly as more chargers rather than higher prices. And 2025 brought several changes at once: the mandate, £5.5bn of manufacturer discounts, oil prices and interest rates all moved, so no single two-market diagram isolates the effect of one. The direction of each link is clear; the magnitude needs data on elasticities.
New car registrations: Society of Motor Manufacturers and Traders, full-year 2025 figures (6 January 2026) and July 2026 figures. The curves on the diagrams are for invented markets, chosen so the shifts are clear. Diagrams drawn with Rough.js and perfect-freehand, both MIT licensed.