Against that backdrop, car rental firms and businesses remain by far the biggest buyers while private consumers have proved more reluctant.
In April, the number of EVs sold to consumers dropped by 22pc to 3,544, according to the Society of Motor Manufacturers and Traders (SMMT).
Mr Coe said this sales slowdown was one of the factors behind the sudden surge in discounting.
He also echoed a previous warning from rival car dealer Vertu that some manufacturers could seek to reach their EV sales targets by constraining the supply of new petrol cars.
He said: “The ZEV mandate could mean there is more volatility on pricing to help EV sales, or there is some talk that some [carmakers] might restrict the number of alternative vehicles.
“That does feel like a bad outcome, if I’m honest, but the manufacturers do need to manage their profitability through this transition.”
Mr Coe’s comments came as Auto Trader reported a “robust” year of sales, with group revenues rising from £500m to £571m in the year to 31 March. Profits rose from £294m to £345m.
Shares in Auto Trader surged 14pc to an all-time high of 837p following the announcement.
Elsewhere, a major Chinese carmaker said it was closing its European headquarters amid a slowdown in EV demand on the continent.
Great Wall Motor (GWM), China’s eighth largest EV manufacturer, will shut down its main office in Munich, Germany, axing 100 jobs.
The move comes after a slowdown in European sales and as proposed EU tariffs on cars from China loom.
The European Commission (EC) has been investigating alleged unfair subsidies given by the Chinese government to EV manufacturers.
The EC claims subsidies from Beijing have allowed Chinese car companies to flood the West with artificially cheap EVs, undercutting local manufacturers. It is planning to hit Chinese EVs with tariffs to create a “level playing field”.
GWM plans to continue selling cars in Europe but will manage the trade from China. The carmaker currently sells vehicles in the UK, Ireland, Germany and Sweden.
A GWM spokesman was contacted for comment.