Last Friday, we awoke to the news that September represented the best month ever recorded for battery electric vehicle sales in the UK, while also being the worst month ever recorded for the combined market share for new petrol and diesel sales. We’re beginning to see a seismic shift in the UK’s car market, thanks to smart, ambitious regulation in the form of the Zero Emission Vehicle (ZEV) mandate.
Rather than rejoicing in this news, the car industry has instead decided to use this moment to claim that our EV market looks set to miss its target, calling on the Chancellor to bring subsidies to support an industry which has made record profits for years. Europe’s six biggest carmakers made £110 billion in profits in the last two years alone while JLR recently recorded its highest Q1 revenue on record. Meanwhile, the UK’s automotive industry body (SMMT) has called the cost of compliance “astronomical… and unsustainable” and some carmakers have called for the regulation to be derailed with Ford calling to “put electric vehicle targets on pause”.
What we’re seeing is a classic strategy from sections of the car industry to undermine or derail regulation, or to receive massive handouts, everytime new climate targets come into force. We’ve seen this in 2020/2021 when the last targets came in and we’re seeing this again now. Yet carmakers complied then and they will now. The same carmakers are trying to derail the EU 2025 CO2 targets, all with the aim of prolonging the internal combustion engine and maximising profits at the expense of taxpayers and the climate.
The Government should not buckle to this pressure and stick with the regulation that is crucial for the UK’s climate goals. It has been instrumental in delivering £22 billion in EV, battery and charging investment to the UK in the past 3 years as well as dropping EV prices for consumers and bringing more affordable EVs to the market. If we weaken targets those investments and the jobs that come with it may never materialise.
The reality is that the New Automotive analysis shows that the industry is on track to meet this year's ZEV targets without paying fines - some may need to borrow credits from their future sales or purchase credit from other carmakers which are overcomplying. These flexibilities were lobbied in by the industry and it was always expected to be used by some manufacturers that failed to get out of the starting blocks quickly with EV sales this year. Much is said of the headline 22% ZEV target for car sales this year, but with the flexibilities it’s actually closer to 18%, which is where sales are already at for this year.
Meanwhile, the number of EV models available are increasing and prices are dropping, with carmakers offering better deals to attract and increase demand. The ZEV mandate was always intended to push carmakers to bring prices down to support the British public to make the switch - we’re seeing this happening now. This is great for UK car buyers who are keen to switch but have been held back by high EV prices. Thanks to the ZEV mandate, smaller, more affordable models with good range are already coming to the market starting with the Citroen e-c3 and Renault R5. In the next two to three years, a dozen more models for £23,000 and below are expected to hit the market - any weakening of the ZEV targets puts this at risk.
To keep UK climate targets on track and EV prices dropping the UK government needs to hold firm on targets and fines, and not extend flexibilities. Without strong regulation, EV roll out will not continue at the pace needed to meet climate targets or to deliver the cheaper, smaller EVs needed by consumers. Instead of spending taxpayer money on subsidies for an industry that has made record profits for years, the Government should instead focus on actions that make it easier for drivers to make the switch, boost consumer confidence in EVs and ensure that the UK benefits economically from the transition.
This includes reforming car taxation to encourage carmakers to bring smaller and affordable EV models to the market. It also means bringing forward additional policies to accelerate the development of the charging network in underserved areas and introducing standardised battery health testing and information - both of which were Labour manifesto commitments. Meanwhile, developing a robust automotive industry strategy for EVs and batteries should also be a priority to secure high quality green jobs and growth to the UK.
The Government is due to consult on the phase out date for new petrol and diesel vehicles before the end of the year. This moment provides the perfect opportunity for the Government to reaffirm its commitment to the ZEV mandate, and send a clear signal to industry that the trajectory for the UK’s EV market is set in stone.
