Car makers face £2bn in ZEV Mandate fines despite spending £4bn on EV discounts

The UK’s car makers are pleading for urgent intervention from the government, claiming the rigours of the Zero Emissions Vehicle Mandate are placing “unsustainable business costs” on the industry in the UK.

According to new analysis from the Society of Motor Manufacturers and Traders (SMMT), the ZEV Mandate targets that are currently in place will cost car makers a whopping £6 billion in 2024 alone. That figure includes £4 billion earmarked for discounting showroom prices in a seemingly ill-fated attempt to boost demand for electric cars and thus reach the 22 per cent threshold of total sales demanded by the ZEV Mandate this year. The SMMT also calculates that a further £1.8 billion will be needed to cover ZEV Mandate fines, incurred as a result of firms being unable to meet that previously agreed 22 per cent target.

The SMMT says urgent government intervention is required “to safeguard the sector and Britain’s zero emission vehicle transition”. It says the need to fulfill ever-rising sales quotas will cost even more in 2025, and states that the ZEV Mandate in its current form has “the potential for devastating impacts on business viability and jobs”.

The calls from industry create a challenging choice for a Labour government elected on a manifesto that on the one hand promised to support industry and manufacturing investment, but on the other pledged to reverse the previous government’s decision to delay the ban on new internal-combustion powered car sales from 2030 to 2035.

“With global manufacturers already making production cutbacks due to weak EV demand, losses of this scale could force brands to withdraw from the UK market and cause global investors to question the UK’s appeal as a manufacturing destination,” the SMMT says. The organisation’s chief executive Mike Hawes is calling for an urgent review of the market, and the regulations. 

“Not because we want to water down any commitments, but because delivery matters more than notional targets,” he says. “The industry is hurting; profitability and viability are in jeopardy and jobs are on the line. When the world changes, so must we. Workable regulation – backed with incentives – will set us up for success and green growth over the next decade.”

According to the SMMT, when the ZEV Mandate was conceived, the industry believed that 457,000 EVs would be registered in the UK in 2024. In fact the numbers will be almost 100,000 short of that figure. That’s in spite of the industry spending billions investing in new products, with a choice of 130 zero-emisssion models now on sale.

However, the government must also weigh-up the mixed messages any leeway given to car manufacturers could send out to investors in the burgeoning EV charger infrastructure industry.

Back in October, infrastructure trade body Charge UK wrote to the Chancellor urging her to ignore calls from the car industry to ease back on the ZEV Mandate, saying it gives investors the confidence to invest in the UK’s infrastructure roll-out.

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