UK backs down from EV sales mandate carmakers won’t meet

The UK government vowed more support for the nation’s car industry and will consult with manufacturers about changing an electric-vehicle sales mandate they won’t meet this year.

While the government remains committed to a 2030 phase-out of new cars powered solely by combustion engines, its sales quotas for zero-emission vehicles, or ZEVs, aren’t working as planned, Business and Trade Secretary Jonathan Reynolds said.

“The transport secretary and I have heard you loud and clear on the need for support to make this transition a success," Reynolds told the the Society of Motor Manufacturers and Traders, the auto industry’s trade group. “We’ll be consulting with you on changes to the ZEV mandate and inviting your views on options for a better way forward."

The mandate put in place during the waning months of Rishi Sunak’s time as prime minister requires that 22% of the new cars and 10% of the new vans each manufacturer sells this year be zero-emission. The industry as a whole has exceeded the target for cars in a single month this year, even as manufacturers have discounted EVs by billions of pounds.

Plant Closing

Reynolds spoke hours after Stellantis NV revealed plans to close one of its van factories in the UK that employs around 1,100 workers. The owner of Vauxhall expects to shift production of electric vans from its plant in Luton, northwest of London, to its other factory in Ellesmere Port, near Liverpool.

The announcement was a “bitter blow," Reynolds said Wednesday in the House of Commons. He said Carlos Tavares, Stellantis’ chief executive officer, told him and Transport Secretary Louise Haigh after just 10 days in office in July that his desire was to close the Luton plant.

Stellantis and almost all of its major European peers have issued profit warnings in recent months as a result of slowing sales, increased competition and a letdown in EV demand. The industry’s slump is hitting the UK particularly hard.

Nissan Motor Co., the nation’s leading manufacturer, recently slashed forecasts and announced plans to cut output and 9,000 jobs globally. Jaguar Land Rover, the country’s No. 2 producer, is making over its Jaguar brand, which won’t sell new cars in its home market until 2026. And just last week, Ford Motor Co. revealed it will eliminate 4,000 positions in Europe, primarily in Germany and the UK.

“This industry is facing a greater set of challenges today than at any point in the last 50 years," Reynolds said Tuesday. “The news last week from Ford, and which I received from Stellantis today, only confirms what we already knew about the scale of those challenges. But it is no less painful."

£4 Billion Bill

The SMMT estimates that carmakers will offer UK consumers about £4 billion ($5 billion) worth of discounts on EVs this year while still likely falling short of the government’s mandated share of sales.

Mike Hawes, the trade group’s chief executive officer, has called this level of incentives unsustainable and questioned what he called a “build it and they will come" approach to the EV transition.

“The fact is, we are building them, but they aren’t coming in sufficient numbers to buy," Hawes said Tuesday. “We cannot incentivize that market on our own."

Reynolds said the government will fast-track its consultation so that the industry has clarity before the new year.

“When I say decarbonization must not mean deindustrialization, I mean it," he said. “Winning the race to net zero and having a world-leading automotive sector must go hand in hand."

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