Cabinet ministers have said they will work with the automotive sector to help support the UK’s transition to EVs in a move that’s expected to lead to a consultation on the 2030 ICE ban and ZEV mandate.
Transport Secretary Louise Haigh and Business and Trade Secretary Jonathan Reynolds held a two-hour meeting yesterday with carmakers including Stellantis, Nissan and Ford, as well as charging firms, to discuss a downturn in EV demand and manufacturers’ concerns over the EV rules.
The meeting follows warnings from OEMs of “irreversible damage” from the EV rules. Nissan told the Financial Times on Saturday that the UK automobile industry had reached a ‘crisis point’ with jobs and investment at risk” if the rules were not relaxed. Stellantis has also warned it could pull production from the UK unless there is a change of heart.
The ZEV mandate became law in January 2024, requiring zero-emission vehicles to make up increasing proportions of new car and van sales in the run-up to the ICE ban. For 2024, this is set at 22% of all new cars sold and 10% for vans, with a potential fine of £15,000 per non-EV sold, although vehicle makers can also comply with the mandate by reducing CO2 emissions from petrol and diesel sales, borrowing credits from future targets, and purchasing credits from other carmakers.
Speaking earlier this week, Transport Secretary Louise Haigh said she would look at “flexibilities” but insisted that the mandate “will not be weakened”.
Now, in a statement following the meeting, a spokesperson said the Government recognised the “global challenges the industry has been facing” and said ministers had “underlined the Government’s commitment to working constructively and in close partnership with the sector as we support the transition to electric vehicles by 2030”.
The Government also confirmed that it was “committed to reinstating the 2030 phase-out of cars solely powered by internal combustion engines and delivering the ZEV transition in a way that also supports UK economic growth” – and said it would “set out further details in due course”.
Ministers are reportedly refusing to back down on the deadlines for the penalties and are holding firm for now on the level of the fines but are open to new “flexibilities”. According to the FT, this could include allowing companies to count British-made cars sold abroad in their sales targets.
Following the meeting, Nissan has called for “urgent action from the Government by the end of the year to avoid a potentially irreversible impact on the UK automotive sector”.
The carmaker, which opened its Sunderland plant in 1984 and is now transforming it into an EV36Zero hub to build future all-electric versions of its Qashqai and Juke crossovers, along with the next-generation Leaf, said that missing the target will result in significant fines for manufacturers unless credits are purchased from EV-only brands – none of which manufacture in the UK, “meaning the UK automotive industry will effectively be subsidising EV sectors in other countries, at the expense of investment in Britain”.
And the Society of Motor Manufacturers (SMMT), which was also at the meeting along with the BVRLA, has said it will now “work urgently with government to identify any adjustments necessary to help the industry and government meet their targets, instilling confidence in the consumer and other stakeholders”.
The SMMT said the auto industry had made clear its concerns about the pace of the EV transition and the impact on the “health of the overall market and the attractiveness of the UK as a manufacturing location”.
Industry as a whole on course to meet targets
But there are others who want the Government to stand firm.
Campaign group T&E has said that carmakers are well on track to meet the ZEV mandate requirements for this year.
While the official 2024 ZEV mandate target is set at 22%, compliance flexibilities mean that carmakers only need to achieve an average of 18% BEV sales to stay in line with regulations.
Current data indicates that battery electric vehicle (BEV) sales account for 18.3% of the UK car market and in October BEVs reached 21% of the market.
Presently, nine out of 20 carmakers already have an excess of ZEV credits available (meaning they are already exceeding the requirements) and this position will improve further as carmakers always boost sales towards the end of the year in order to comply. For example, in December 2022 fully electric car sales reached 33%.
T&E also says that the ZEV mandate is proving effective in making electric cars more affordable as carmakers shift focus onto smaller, more affordable EVs to satisfy consumer EV demand from the mass market.
A T&E spokesperson said: “Weakening the ZEV mandate now in the UK – by extending flexibilities, for instance – would slow market momentum, jeopardise climate goals, and hinder the UK’s transition to a greener automotive industry.”
New Automotive, an independent transport research organisation “with a mission to accelerate the switch to electric vehicles in the UK”, has also published its own briefing, showing that the UK’s EV targets allow multiple routes to compliance – including a reward for selling more fuel efficient cars – and stressing that UK EV registration data alone is not a reliable way to judge whether targets are being met.
‘Uncertainty is the enemy of the EV transition and threatens investment on all sides’
And the charging sector has also urged the Government not to back down on the ZEV mandate.
Trade body ChargeUK, which was at the meeting, stressed that its members are delivering the vital infrastructure necessary for the EV transition at pace and scale, and have committed to invest over £6bn up to 2030.
Speaking after the discussion, Vicky Read, CEO of ChargeUK, said: “That progress – building an entire industry practically from scratch over 10 years – was acknowledged by government this afternoon and everyone is agreed that uncertainty is the enemy of the EV transition and threatens investment on all sides.
“We will study the forthcoming consultation closely and continue to make the case to retain what we already have – a strong ZEV mandate that works.”
Ian Johnston, CEO of Osprey Charging, said: “This was an open and collaborative meeting of industry. There is universal commitment to the ZEV trajectory, and a collective desire for government to provide certainty and to take action to further drive retail EV demand. From a charging investment perspective, confidence in the numbers of ZEVs hitting the UK roads is key: this must not be undermined.”
In its statement, the Government also acknowledged the industry rollout of charge points and said that it is “only by bringing two critical industries together – manufacturing and infrastructure – that we can look holistically at the challenges of encouraging fleets, businesses, and families to choose zero emission models”.
Labour also said it was working to knock down the regulatory barriers to getting chargers in faster and also wants to look at possible charge point targets, as set out in its Automotive Strategy last year, that “support the charge point industry, give consumer confidence and gets government funding where it’s most needed”.
Octopus Electric Vehicles has also warned that “tampering” with the ZEV mandate “risks undermining investment in a massive growth industry”.
Fiona Howarth, CEO of the EV leasing and charging firm, said: “Demand for EVs is rising, not just in the UK but globally. Every second driver in the UK today wants an EV, and we need to ensure we can deliver them.
“Whatever mechanisms are considered to support UK employers during a transitioning market must not impact the legislation that investors rely on. Legislation must be bankable to deliver a key government objective to crowd in private investment.”
A report published last month to provide comprehensive analysis of the UK’s automotive sector and its journey to electrification also stressed the need for a “proactive, ambitious strategy to support the sector’s evolution” to EVs.
Commissioned by the Energy and Climate Intelligence Unit (ECIU) and developed by CBI Economics, the report found that with a rapid transition to EVs, the UK economy could see a £16.1 billion increase in GVA (gross value add) by 2035.
Conversely, in a more pessimistic scenario, where the UK automotive sector does not have the correct environment to adapt to changing market conditions, the UK economy could lose £34.1bn by 2035 with over 400,000 jobs lost.
