Ministers are reported to have launched a review of electric car sales quotas, raising expectations that the UK could soften one of its flagship net zero policies as industry pressure intensifies.
According to The Times, Government officials have begun early work on a revised approach to the zero emission vehicle mandate, with discussions underway between manufacturing industry chiefs and civil servants. One senior industry source told the newspaper that extensive discussions were now taking place between bosses and civil servants.
Another said that carmakers had been asked for detailed production plans for future battery electric and plug in hybrid models through to 2035.
A government spokesman told the newspaper: “We recognise manufacturers are facing challenges, but we’ve shown we are adaptable before, and are beginning conversations to inform the planned review of the ZEV mandate, to be published by early 2027.”
ZEV targets under growing strain
The ZEV mandate, introduced in 2024, requires 22% of new car sales to be zero emission in its first year, rising to 33% in 2026 and accelerating to 80% by 2030. New petrol and diesel car sales are due to end by 2030, with hybrids permitted until 2035.
Failure to comply carries a £12,000 per vehicle penalty, prompting manufacturers to deploy heavy discounting. The Society of Motor Manufacturers and Traders estimates these incentives have cost the industry £10 billion in the first two years of the policy.
The SMMT has reiterated calls for an urgent review, warning demand continues to fall short of regulatory targets despite what it described as unprecedented discounting, expanding model choice and government support.
It forecasts battery electric vehicles will reach a 28.5% market share by the end of 2026, still below the 33% mandate requirement.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said: “The reality is that the assumptions underpinning the mandate’s creation have not materialised – and given the differing economic, political and industrial situation the sector now faces, a comprehensive review of the transition is needed, and urgently.”
Electric van adoption remains particularly challenged, accounting for around 10% of registrations against a 24% target, despite strong growth driven by incentives.
EU shift adds pressure
The review comes as the European Union signals a softer approach to its own 2035 zero emission targets, proposing a 90% emissions reduction goal and allowing continued sales of some hybrid models.
Industry leaders have warned that divergence from European policy risks undermining UK competitiveness, particularly given that 80% of British built cars are exported and more than half go to the EU.
Retailers have also raised concerns that rigid targets could limit vehicle supply, with calls growing for closer alignment with international policy. The National Franchised Dealers Association (NFDA) argues that UK policy needs to remain aligned with changing international benchmarks to protect competitiveness, provide market certainty and support realistic transition pathways for retailers and consumers.
The Times reports that officials are aiming to complete the ZEV review in early 2027, although industry figures are said to be pushing for conclusions to be brought forward to avoid tighter 2027 targets coming into force.
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