ZEV mandate consultation to provide ‘clarity’ within weeks

The UK government has confirmed it will launch a new ZEV mandate consultation following pressure from car makers.

Business Secretary Jonathan Reynolds confirmed on Tuesday night that a consultation on the mandate would be launched in the coming weeks, saying that he was ‘profoundly concerned’ about the likelihood of industry meeting the targets.

Speaking at the Society of Motor Manufacturers and Traders (SMMT) annual dinner, Reynolds said the government remained committed to a 2030 phase out of purely petrol and diesel cars, however he added “we have heard you loud and clear on the need for support to make this transition a success”.

Reynolds and Transport Secretary Louise Haigh held talks with SMMT leaders and senior figures from the UK auto industry last week. During that summit, car makers called for changes to the rules, arguing that the targets were set during a period of unusually high demand and don’t represent the current state of the market.

Under the existing ZEV mandate targets, 22% of a manufacturer’s new car sales must be zero-emission cars by the end of 2024, rising to 28% in 2025. They also require that 10% of van sales are zero emissions.

Policies not operating as planned

Speaking to SMMT members on Tuesday night, Reynolds said: “I don’t believe the policies that we have inherited, and I mean specifically in relation to zero-emission vehicles, are operating today in a way anyone intended them to.”

He said the consultation would be launched in coming weeks and would provide clarity for the industry.

Earlier this month, Ms Haigh insisted that the ZEV mandate would not be weakened – suggesting there will be no change to the annual sales targets. But she did say the government would look at ‘flexibilities’ within the legislation.

Such flexibility could include allowing zero-emissions credits to be transferred between cars and vans, awarding credits for UK-built EVs sold overseas, and possibly supporting new incentives to boost private sales.

The news comes as Stellantis announced plans to shut its Luton factory, which was due to build its range of mid-sized electric vans from next year. That operation will now move to Vauxhall’s Ellesmere Port factory in a decision made ‘within the context of the UK’s ZEV mandate’ according to Stellantis.

Last week Nissan, which has plans to build three EVs at its Sunderland factory, warned that urgent action was required to help manufacturers struggling to meet these targets. It called for the planned £15,000-per-vehicle fines to be paused for two years and for more flexibility in the ‘credit trading’ programme.

And on Wednesday, the SMMT warned of ‘alarm bells’ as car makers faced £1.8 billion in fines for missing 2024’s targets, on top of a claimed £4bn worth of discounts on electric models.

SMMT chief executive Mike Hawes 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.”

While EV sales fall in other countries, they continue to grow in the UK and accounted for 20.7% of new car registrations in October. The SMMT says this has only been achieved through ‘unsustainable’ discounting, and warned that the industry looked set to reach around 18% EV sales by the end of the year.

‘Backsliding threatens jobs and investment’

The consultation has been broadly welcomed but observers have warned that any changes must not dilute the existing sales targets.

Vicky Read, CEO of ChargeUK said, “We’re pleased to hear that the government is moving ahead with its promised consultation on the ZEV mandate, which we hope will bring much needed clarit.

“Government could not have been clearer last week that there would be no tinkering with the percentages of electric cars that must be sold ahead of 2030. Any backsliding on that risks inducing the uncertainty that all sides agreed is the very enemy of the EV transition.”

Paul Hollick, chair of the Association of Fleet Professionals, said: “It has become clear that, however well-meaning its intentions, the ZEV mandate needs to change, and it is good news that the government has recognised this fact.

“From a fleet point of view, we believe that while the car element of the ZEV mandate requires some moderation, vans are the real issue. Electric van sales have been flatlining at around 5% for over a year and the reasons for this are that the practical limitations of the available models – range, payload, charging facilities.

“Because of these factors, we’re in a situation where, no matter what percentage of new vans manufactured are electric, large numbers of our members are planning to stick with their existing diesel vans. Fine tuning the ZEV mandate probably won’t improve the overall situation. Instead, more direct, radical action is needed if we’re to avoid more factory closures of the type announced by Stellantis today.”

However, Fiona Howarth, chief executive of Octopus Electric Vehicles urged the government to ‘hold firm’. She said: “EVs are already six times cheaper to run than petrol cars for those with a driveway, and private investors have committed £6bn to further strengthen the public charging network.

“Manufacturers that failed to invest in the future are now facing challenges. To secure long term jobs in the sector, the government must hold firm on the ZEV mandate and invest in targeted support for manufacturers committed to the electric transition and jobs in the UK.

“Changing the mandate would mean shooting ourselves in the foot by bowing to the pressure of a few laggard companies.”