A row is brewing in the car industry as companies face £15,000 fines over a lack of quotas for electric vehicles
A new row is brewing in the car industry as manufacturers are told they must meet electric vehicle (EV) targets from the new year – despite the government’s decision to delay the ban on petrol and diesel vehicles until 2035.
The government is expected to confirm a mandate that will result in automakers being forced to sell some of their electric vehicles – or face a hefty fine.
This comes despite Rishi Sunak confirming on Wednesday that he would delay plans to ban polluting cars by five years until 2035.
Under current proposals, which come into force from January 1, 22 percent of new cars sold by manufacturers in 2024 must be electric. This proportion should then rise to at least 80 percent by 2030 and to 100 percent by 2035, when the sale of hybrid cars would also be banned.
Manufacturers who fail to meet these limits will have to pay the government £15,000 for each polluting car sold above the limits.
Under current proposals, which come into force from January 1, 22 percent of new cars sold by manufacturers in 2024 must be electric (stock image)
Manufacturers who fail to comply with these limits will have to pay the government £15,000 for each polluting car sold above the limits (stock image)
Although the final details of this so-called ZEV mandate have not yet been confirmed and ministers could water down the requirements, the limits are expected to remain largely unchanged.
However, some commentators doubt that this move will cause more confusion in the industry.
“You couldn’t have made this up,” said Howard Cox, founder of campaign group FairFuelUK.
“The Prime Minister’s welcome U-turn to enforce the punitive sales ban on new diesel and petrol cars until 2030 now follows the realization that vehicle manufacturers will still be forced to meet strict production quotas for electric vehicles.”
“As always, without unified thinking, the government is turning its policies on its head,” he said.
Ian Plummer, commercial director at Auto Trader, warned that the mandate “will be challenging for the majority of manufacturers” who are lagging well behind government targets in terms of electric vehicle sales. Electric cars account for around 16 percent of all new car sales in the UK.
However, he said the decision to keep the requirements in place could result in manufacturers being forced to lower their prices to stimulate consumer demand.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), said: “While the end of sales for new conventional petrol and diesel vehicles in the UK has now been postponed, it is expected that regulation requiring the sale of electric vehicles , will continue to do so.” will be published shortly and will come into effect in just over 100 days.”
Rishi Sunak confirmed on Wednesday he would delay plans to ban polluting cars by five years until 2035
“This remains the key mechanism for meeting the UK’s net zero commitment.”
Ginny Buckley, managing director of Electrifying.com’s EV marketplace, said: “This may not be the route manufacturers were hoping for, but now they finally have clarity on the way forward and need to focus on bringing more affordable models to the market “We know this is deterring many consumers from making the switch.”
The ban’s delay was met with mixed reactions from some of the industry’s biggest players.
Ford criticized the prime minister’s about-face, saying it could jeopardize the shift to electric vehicles. Jaguar Land Rover and Toyota called it a pragmatic move.
The Ministry of Transport said an announcement on the ZEV mandate would be made in due course.
What is the ZEV mandate and how is it expected to work?
Binding targets would be introduced from January 1st only for “mainstream” car manufacturers that produce more than 2,500 units per year.
According to official information, so far in 2023 (as of the end of August), only 16.4 percent of all new cars sold are emission-free.
Manufacturers must increase that share starting next year and every year thereafter to comply with the mandate.
This graphic shows electric car adoption in the UK since 2015, based on figures provided to the government by the SMMT
A ZEV mandate will give the Treasury Department an accurate picture of when it will miss out on significant revenue from taxes on fossil fuel cars – both vehicle excise taxes [car tax] and fuel tax – which pour billions of pounds into the state coffers every year
Under the original proposal, 22 percent of all car registrations in the UK must be electric vehicles by 2024.
The proportion of electric vehicles for each brand would then have to rise to 52 percent by 2028 and rise to 80 percent by 2030 before 100 percent electric cars are sold by 2035.
Forecast for annual ZEV mandate targets
2024: 22% of new car sales are electric
However, as the Prime Minister has moved the goalposts on banning the sale of new petrol and diesel vehicles, these targets will ultimately need to change.
This is because some new hybrid vehicles will be allowed to continue to be sold even after the ban in 2035, meaning manufacturers will continue to offer UK drivers models that are not zero-emission.
The mandate is expected to allow manufacturers to sell non-ZEVs up to a certain percentage of a brand’s new car and van fleet, with the intention of ZEVs making up the remainder of sales.
Excess non-ZEV sales can be covered by purchasing certificates from other manufacturers, using certificates from past or future trading periods during the early years of the policy, or by offsetting them with credits.
Manufacturers that fail to meet the targets face fines of £15,000 for each non-ZEV car and £18,000 for each non-ZEV van, the March consultation says.
Additional credits are offered for vehicles used by car clubs or wheelchair accessible.
Ministers see the policy as the most effective way to convert the UK’s car fleet to electric vehicles.
They believe this is the only way to give the Treasury an accurate picture of how quickly it will lose fuel tax revenue, which pours billions of pounds into its coffers every year.