Government announces review of ZEV Mandate
Thu 05 December 2024
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The Government has confirmed plans to consult on potential revisions to the Zero Emission Vehicle Mandate in the near future. The Mandate, which became law in January this year, sets out the Government’s pathway towards all new cars and vans being zero emission by 2035.
Business secretary Jonathan Reynolds, speaking at an SMMT dinner, confirmed that a consultation will be launched in the coming weeks. However, he stressed that the Government is still committed to the 2030 phase out date for petrol and diesel vehicles, but suggested that there is a need for more support to make the transition to electric a success.
According to a report in Fleet News, the consultation is not expected to mean changes in the annual target percentages for zero emission vehicle sales, but is likely to mean changes in terms of how manufacturers can avoid being fined for missing targets.
The Government announcement followed talks between officials and car manufacturers about the challenges they are facing with ramping up EV sales to meet their supply obligations.
The discussions come against the backdrop of the rapid growth in production of electric vehicles in China (responsible for three-quarters of EV sales globally according to the latest figures) and calls for import tariffs to protect automotive producers in the US and Europe from cheaper imports. It also follows announcements by Stellantis of the closure of its factory in Luton and of 800 job cuts at Ford.
The ZEV Mandate requires 22% of all UK new car sales to be battery electric vehicles (BEV) this year, ramping up to 28% next year and 100% by 2035.
Manufacturers will face fines of £15,000 for each vehicle sold outside the target, but the reality of the targets is not as clear-cut as this, as there are several alternative ways for manufacturers to meet compliance.
A group of leading stakeholder organisations have written an open letter to ministers calling on them not to 'water down' ZEV Mandate targets. ChargeUK, the UK Sustainable Investment and Finance Association (UKSIF), the Association for Renewable Energy and Clean Technology (REA) and the electrical energy trade association BEAMA cite earlier UKSIF research which concluded that 57 of the 100 largest UK transport companies, representing £900bn turnover, have either already moved investment out of the UK or plan on doing so, in search of markets with greater policy support for their sustainability goals.
BEAMA’s CEO Yselkla Farmer said (reported by edie): “A decision to back track on the ZEV mandate will be entirely counter to the UK’s longer term ambition to drive inward investment for manufacturing.”
UKSIF CEO James Alexander added: “Policy wavering risks undermining that confidence, which would be very hard to recover from. Meanwhile, the lack of a long-term sector decarbonisation plan for UK transport is stalling further private investment and risks widening the gap between our emissions targets and our trajectory. Private finance is ready and waiting to finance electric vehicles and chargepoints, but other geographies are doing a better job of providing a transparent, consistent policy approach, and the UK risks losing out.”
Meanwhile, the SMMT reports that battery electric vehicle (BEV) registrations reached 25.1% of the overall UK car market in November, rising for an eleventh successive month. The SMMT says, however, that the rise was against the backdrop of a declining overall market and driven by heavy manufacturer discounting, linked to efforts to achieve the ZEV Mandate conditions.
Mike Hawes, SMMT Chief Executive, said: "Manufacturers are investing at unprecedented levels to bring new zero emission models to market and spending billions on compelling offers. Such incentives are unsustainable – industry cannot deliver the UK’s world-leading ambitions alone. It is right, therefore, that government urgently reviews the market regulation and the support necessary to drive it, given EV registrations need to rise by over a half next year. Ambitious regulation, a bold plan for incentives and accelerated infrastructure rollout are essential for success, else UK jobs, investment and decarbonisation will be at further risk."
Separate analysis from the Energy & Climate Intelligence Unit (ECIU) has found that the UK car industry is on course to hit the ZEV Mandate target for 2024. This is consistent with a statement recently made by the independent Climate Change Committee.
ECIU says that this is made up of credits earned from selling EVs – likely to be around 19% – and credits earned from selling low CO2 emissions petrol and diesel vehicles – likely to be over 3%.
Colin Walker, Head of Transport at the ECIU, said: “Suggestions that the car industry will be unable to hit the ZEV mandate target in 2024 are based on a misunderstanding of what the ZEV mandate target actually is. The previous Government, supported by the car industry, designed it to be achieved not only through the sale of EVs but also through the sale of large numbers of low emission petrol and diesel cars.
“Some manufacturers have been slow to wake up to the global shift towards EVs and are being left behind, but many – including BMW, Mercedes and Hyundai – are ahead of the Mandate targets. Government may want to consider more incentives to enable even more households to go electric, but lowering the UK’s EV ambitions by weakening the Mandate would risk putting the UK car industry in the slow lane at a time when global competition is only hotting up, and stalling billions of pounds of investment in the UK’s charging infrastructure."
Andy Palmer, Former CEO of Aston Martin and Founder of Palmer Automotive, said: “The ZEV Mandate is proving that demand exists for BEVs. However, it requires a price correction which is good news for consumers. The bad news for manufacturers is that they are forced to discount where their product offer doesn’t fit the market requirements. This is the challenge of management and product planners, but the challenger Chinese brands are leading the way.
“The ZEV is a clear policy signal for investors and any dilution could have a negative effect on the whole transition and hurt the autos even further. However short- term help might be necessary to help laggard OEMs catch up.”
Image: Courtesy Unsplash
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