The UK government has announced some adjustments to the country’s pathway towards electric cars, designed to offer manufacturers more flexibility over the coming decade.
There will inevitably be crowing from the usual right-wing, anti-EV rags about the regulations being ‘watered down’, but the reality is that the changes being made to the zero-emissions vehicle (ZEV) mandate are fairly minor. Here’s a brief summary:
- 2030 ban for new petrol and diesel cars remains unchanged
- hybrid cars will continue to be allowed until 2035
- manufacturers to be given more flexibility for over- or under-achieving on EV targets before 2030
- low-volume manufacturers (McLaren, Aston Martin, etc.) will be exempted
- manufacturers will be allowed to balance electric car and van sales to help with overall targets
- fines for non-compliance to be reduced
The changes will be welcomed by car manufacturers who have struggled to hit their EV sales targets to date, while they’ll be less warmly received by those brands who invested earlier and harder into EVs and are currently enjoying a sales advantage as a result. Similarly, associated companies who are heavily invested in the EV transition will be displeased, while businesses who depend on fossil fuel cars continuing for as long as possible will be happy.
Expect a flurry of statements from ‘industry figures’ in the next few days, but the overwhelming sentiment will be self-interest rather than anyone actually caring about what car buyers might want…
Headline 2030 date remains unchanged
The headline date for ending the sale of new petrol and diesel cars has not changed – these will still be banned from 2030. This date was originally set at 2040 under Theresa May, pulled forward to 2035 and then 2030 under Boris Johnson, pushed back out to 2035 (with some major caveats) by Rishi Sunak and brought back to 2030 under Keir Starmer.
Unlike the back-and-forth dates set by the Tories, Labour has been consistent about a 2030 cut-off date for new petrol and diesel car sales. Given that many car manufacturers never unwound their 2030 plans when Sunak tried to walk the cut-off date back to 2035, this didn’t result in much change when Labour came to power last year.
Hybrid regulations clarified
The Labour government has now clarified regulations for hybrid cars that the previous Tory government had left unresolved. In short, new hybrid cars (petrol + electric) will continue to be allowed to be sold until 2035.
The Tories had indicated that hybrids that provided a ‘significant’ amount of power from the electric motor would be allowed from 2030 to 2035. The implication was that plug-in hybrids would be allowed, but not basic (non-plugged) hybrids, but they never got around to quantifying what they actually meant
Labour has now said that all hybrid vehicles will be allowed until 2035, which broadens that scope considerably. However, this will presumably exclude so-called mild hybrids, which are not really hybrids at all and can’t drive on electric power alone. They just use a small electric motor to boost the petrol or diesel engine, which improves performance and reduces fuel consumption.
More flexibility for manufacturers before 2030
Under the ZEV mandate, electric cars must make up a minimum percentage of all sales for each manufacturer. Last year, that was 22%, while this year it’s 28%. The targets keep going up until 2030, when at least 80% of all new cars must be EVs and the remaining 20% can be hybrids.
Those numbers, however, are gross targets. Car manufacturers have several flexibilities and loopholes to help them along, which reduces the net target for each brand depending on other factors – like selling larger numbers of low-emissions hybrid cars, buying credits from overachieving brands, banking credits for future years from overachieving in earlier years, ‘borrowing’ credits from future year targets, and swapping credits within groups (eg – Stellantis can pool its numbers across Vauxhall, Peugeot, Citroën, Jeep, Alfa Romeo, Abarth, DS Automobiles, Maserati and Leapmotor).
As a result, the overall 28% gross mandate figure for 2025 is likely to be a net figure of about 23% across the whole industry once it all shakes out, but each manufacturer will have individual targets to hit depending on the flexibilities and loopholes mentioned above.
Previously, some of these adjustments were scheduled to end by 2026, like borrowing credits and counting hybrid models. These will now be extended to 2029, giving car companies as much flexibility as possible up until the 2030 deadline.
Additionally, the fines for non-compliance will be reduced from £15,000 per car to £12,000 per car. In practice, this won’t make a lot of difference to any car company calculations as the fines are still far greater than the cost of complying.
Low-volume manufacturers to be exempted
One significant new measure is that low-volume car manufacturers will be exempted from the interim targets up until 2029, and will continue to be able to sell petrol or diesel cars from 2030 until 2035. The government will continue discussing ongoing reductions of CO2 levels with each manufacturer.
This will apply to UK manufacturers like McLaren, Aston Martin and Morgan, as well as low-volume foreign brands, with annual sales of fewer than 2,500 vehicles.
More flexibility for vans
Light commercial vehicles (LCVs) have a different ZEV mandate to cars, which reflects a very different market environment. Rather than an EV target for this year of 28% as it is for cars, increasing to 80% by 2030, the LCV target is 16% for 2025 and increasing through to 70% by 2030.
To help manufacturers, the government will now allow credit swapping between cars and vans according to a specific ratio (it’s not a simple 1:1 swap). Van credits are more valuable than car credits, with one van credit buying two car credits, and one car credit buying 0.4 van credits.
The end date for new diesel and petrol vans will also now be extended to 2035 instead of 2030. Although no reason was given for the extension, it’s likely due to a lack of hybrid powertrains available in the van market – the only major manufacturer offering a plug-in hybrid van is Ford with its Transit Custom model.
Ongoing tax breaks for EVs, but no more incentives yet
The government confirmed that tax breaks for EVs as company cars or on salary sacrifice programmes will continue, although this is nothing new. There is currently no additional funding for helping consumers switch from fossil-fuel cars to EVs.
The government has said that it will announce its industrial strategy over the summer, and will also keep support for the car industry under review as car companies wait to feel the effects of America’s new tariff war against the rest of the world.