Consequently, the UK’s automotive industry is calling for government intervention to safeguard the sector and Britain’s transition to zero emission vehicles.
Applicable since January 2024, the zero emission vehicle (ZEV) mandate sets out the percentage of new zero emission cars and vans manufacturers will be required to produce each year up to 2030. In total, 80 per cent of new cars and 70 per cent of new vans sold in the UK must be zero emission by 2030, increasing to 100 per cent by 2035.
To date, automotive manufacturers have invested billions into developing over 125 zero emission car models and over 30 van models. Furthermore, improvements in battery technology have been made to allay consumer fears around range anxiety.
However, the SMMT said the original assumptions on which the mandate was founded have not yet been borne out; market demand has failed to meet ambition, interest rates are steep, raw material and energy prices remain high, and geopolitical tensions and economic uncertainty are impacting global confidence. The automotive trade body added that the UK is not immune to global pressures with costs persistently high and a lack of confidence in perceived chargepoint provision resulting in a reluctant market.
When the mandate was unveiled, industry anticipated that 457,000 electric cars would be registered in 2024, which should have accounted for 23.3 per cent of all new car registrations. The latest outlook shows 94,000 fewer cars will be registered, totalling 363,000 with a market share of 18.7 per cent. The situation is worse for vans with the outlook halved to 20,000 units expected to be registered this year, a 5.7 per cent market share against a 2024 target of 10 per cent.
So far, manufacturers have subsidised sales, incentivising fleet, business and consumer EV sales through an estimated £4bn worth of discounts. Despite this, the industry looks likely to miss the 22 per cent EV market share demanded by the mandate, potentially creating a £1.8bn bill for compliance for those missing their targets for cars alone.
According to SMMT, the result is a ‘compliance bill’ of almost £6bn in 2024, with costs mounting in 2025. With global manufacturers making production cutbacks due to weak EV demand, such losses could force brands to withdraw from the UK market and cause global investors to question the UK’s appeal as a place to manufacture.
In a statement, Mike Hawes, SMMT chief executive, said: “We need an urgent review of the automotive market and the regulation intended to drive it. Not because we want to water down any commitments, but because delivery matters more than notional targets. The industry is hurting; profitability and viability are in jeopardy and jobs are on the line. When the world changes, so must we. Workable regulation – backed with incentives – will set us up for success and green growth over the next decade.”
SMMT ‘s follows a decision by Stellantis to consider closing its Luton van plant and consolidate those operations into its Ellesmere Port plant. Stellantis said the decision has been ‘made within the context of the UK’s ZEV Mandate’.
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