Row brews in the car industry as firms face £15,000 fines for missing electric vehicle quotas

A new row is brewing within 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 cars until 2035.

The government is expected to confirm a mandate that will mean car makers are forced to sell a proportion of electric vehicles – or face a hefty fine.

This comes even though Rishi Sunak confirmed on Wednesday that he would be pushing back plans to ban polluting cars by five years to 2035.

Under current proposals, which will come into force from January 1, 22 per cent of new cars sold by manufacturers in 2024 must be electric. This will then increase to at least 80 per cent by 2030 and 100 per cent by 2035, when sales of hybrid cars would also be prohibited.

Manufacturers who do not meet these thresholds will be required to pay the government £15,000 per polluting car sold above the limits.

Under current proposals, which will come into force from January 1, 22 per cent of new cars sold by manufacturers in 2024 must be electric (Stock Image)

Manufacturers who do not meet these thresholds will be required to pay the government £15,000 per polluting car sold above the limits (Stock Image)

Although the final details of this so-called ZEV mandate have not been confirmed and ministers could dilute the requirements, it is understood that limits will remain largely unchanged.

But some commentators have questioned the move for bringing even more confusion to the industry.

‘You couldn’t make this up,’ said Howard Cox, founder of campaign group FairFuelUK. 

‘A welcome U-turn by the prime minister to move the punitive 2030 new diesel and petrol car sales ban is now followed by the realisation that vehicle manufacturers are still being compulsorily forced to meet tough EV production quotas.’

 ‘As ever, the Government with no joined-up thinking, makes policy on the hoof,’ he said.

Ian Plummer, commercial director at Auto Trader, warned the mandate ‘will be a stretch for the majority of manufacturers’ who are significantly behind where the government is telling them they need to be in terms of EV sales. Electric cars make up around 16 per cent of all new UK car sales.

But he said the decision to keep the requirements could mean that manufacturers are forced to slash their prices to drive up consumer demand.

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), said: ‘While the UK’s end of sale date for new conventional petrol and diesel vehicles has now been pushed back, regulation compelling the sale of EVs is still expected to be published imminently and to take effect in just over 100 days.’

Rishi Sunak confirmed on Wednesday that he would be pushing back plans to ban polluting cars by five years to 2035

‘This remains the single most important mechanism to deliver the UK’s net zero commitment.’

Ginny Buckley, chief executive of EV marketplace of Electrifying.com, said: ‘This may not be the route manufacturers were hoping for, but now they finally have clarity on the road ahead, they need to focus on getting more affordable models to market as we know this is holding back many consumers from making the switch.’

The delay of the ban has received a mixed reaction from some of the industry’s biggest players.

Ford criticised the u-turn by the Prime Minister and said it could jeopardise the shift towards electric. Jaguar Land Rover and Toyota called it a pragmatic move.

The Department for Transport said an announcement on the ZEV mandate will be made in due course.

What is the ZEV mandate and how will it likely work? 

Binding targets would be introduced from 1 January only for ‘mainstream’ car manufacturers that produce over 2,500 units per year.

So far in 2023 (to the end of August), just 16.4 per cent of all new cars sold are zero emissions, according to official data.

Manufacturers will need to increase this share from next year and every year thereafter to adhere to the mandate’s rules. 

This chart shows the UK’s uptake of electric cars since 2015, based on figures provided to the Government by the SMMT

A ZEV mandate will provide the Treasury with an accurate picture of when it will lose substantial revenues from taxes on fossil fuel cars – both vehicle excise duty [car tax] and fuel duty – which contribute billions of pounds to its coffers every year

Under the original proposal, in 2024, 22 per cent of all car registrations in Britain will need to be EVs.

Each brand’s EV share would then need to rise to 52 per cent by 2028 and scaling up to 80 per cent by 2030 before reaching 100 per cent electric cars sales by 2035.

Projection for annual ZEV mandate targets 

2024: 22% of new car sales electric

2025: 28% 

2026: 33% 

2027: 38% 

2028: 52% 

2029: 66% 

2030: 80% 

2031: 84% 

2032: 88% 

2033: 92% 

2034: 96% 

2035: 100% 

However, since the PM moved the goalposts on the ban on sales of new petrol and diesel vehicles, these targets ultimately will need to change.

This is because some new hybrids will be allowed to remain on sale after the 2035 ban, which means manufacturers will still be offering British drivers models that are not zero emissions.

The mandate is likely to includes allowances for manufacturers to sell non-ZEVs up to a given percentage of a brand’s fleet of new cars and vans, with the intention that ZEVs account for the remainder of sales.

Any excess non-ZEV sales can be covered by purchasing allowances from other manufacturers, using allowances from past or future trading periods during the initial years of the policy, or offsetting with credits.

Manufacturers that fail to comply with the targets face fines of £15,000 for every non-ZEV car and £18,000 per non-ZEV van, the March consultation said.

Extra credits will be on offer for vehicles deployed with car clubs, or those that are wheelchair accessible.

Ministers see the policy as the most effective way of shifting the UK’s car parc to EVs.

They believe it is the only way of providing the Treasury with an accurate picture of how rapidly it will lose revenues earned through fuel duty, which contribute billions of pounds to its coffers every year.

This post first appeared on Dailymail.co.uk