The Society of Motor Manufacturers and Traders (SMMT) has renewed pressure on the Government to reform the Zero Emission Vehicle (ZEV) mandate, arguing that urgent action is needed to protect investment, jobs and the competitiveness of the UK automotive sector.
The intervention comes as ministers prepare to meet automotive industry leaders this week amid growing expectations the Government will consult on changes to the current EV sales targets.
Publishing its latest ‘State of the Automotive Nation report’ at the SMMT International Automotive Summit in London, the trade body said reform of the ZEV mandate remains its most urgent priority, alongside securing future UK-EU trade arrangements and reducing business costs.
The report builds on repeated calls from the SMMT, dealership groups, manufacturers and trade unions for ministers to review the mandate sooner than planned, arguing that regulation is continuing to outpace consumer demand for electric vehicles.
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Industry reiterates that targets are outpacing demand
The SMMT welcomed measures introduced during the Government’s first year in office, including the £4 billion DRIVE35 funding programme, EV grants, lower industrial electricity costs through the British Industrial Competitiveness Scheme (BICS), trade agreements with the US, India and the GCC, and regulation supporting self-driving vehicles.
However, it said these measures would not be enough unless ministers also reform the ZEV mandate, secure future UK-EU trading arrangements and further reduce the UK’s high energy and operating costs.
Every automotive business leader responding to the SMMT’s latest survey said the UK is behind the trajectory required to meet the 2030 phase-out of new petrol and diesel cars.
Almost three-quarters (73.8%) said the market is significantly behind target.
The trade body said manufacturers remain committed to net zero and have invested billions of pounds in electric vehicle technology, but the pace of regulation is running ahead of natural consumer demand.
It warned that manufacturers have now spent more than £12 billion subsidising electric vehicle sales through discounts and incentives, reducing funds available for future investment, new products and employment while weakening residual values.
From January 2027, the ZEV mandate requires battery electric vehicles to account for 38% of new car sales and 34% of new van sales before rising again to 52% and 46% respectively in 2028. Current market shares stand at 23.9% for cars and 9.5% for vans.
Trade concerns grow
Alongside the ZEV mandate, the SMMT warned that proposed European Commission “Made in Europe” rules could make UK-built vehicles less competitive across much of Europe unless the UK secures recognition for vehicles assembled in Britain.
It also highlighted the impact of tougher rules of origin under the UK-EU Trade and Cooperation Agreement, due to come into force in January 2027.
Without a negotiated solution, the SMMT estimates a 10% tariff could apply to around 70% of battery electric and plug-in hybrid vehicles traded between the UK and EU, creating a tariff bill of around £1.4 billion in 2027 and putting £16.4bn of trade at risk.
Government urged to act now
Mike Hawes, SMMT chief executive, said: “UK Automotive can drive growth, innovation and net zero, but only if the right decisions are taken now.
“The Industrial Strategy sets out a plan, but delivery is now what matters.
“We need open trade with Europe, competitive conditions at home, and a realistic route to grow zero emission vehicle uptake.
“Reforming the ZEV Mandate is not about weakening ambition; it is about making the transition achievable, protecting investment and ensuring the UK remains a place where automotive businesses can build, sell, export and grow. The window for action is closing, which means we cannot wait for lengthy discussions.”
The report comes as the Government is expected to discuss the future of the ZEV mandate with automotive industry representatives this week before launching a consultation on possible changes to the policy.