The car industry says the UK Government’s ZEV mandate needs urgent reviewing, with heavy discounts required for compliance making EVs unprofitable.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), said at the organisation’s Electrified summit that the average discount on an EV sold in the UK last year was £11,000.
The summit then heard from Eurig Druce, group managing director of Stellantis UK, that it was not currently possible to make a profit building and selling EVs here.
However, the summit also heard from Keir Mather, minister for aviation, maritime and decarbonisation at the Department for Transport, that the Government was not planning to bring a planned ZEV mandate review forward from 2027.
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Warning of ZEV mandate ‘compliance crunch’
The ZEV mandate requires an increasing percentage of manufacturers’ new car and van sales to be zero-emission each year, with potential fines for non-compliance.
Hawes said that compliance with the mandate for manufacturers came “at a tremendous cost”, through either offering incentives to customers or through a credit offsetting scheme.
He said: “Last year, the average discount on an EV was £11,000. The payment for non-compliance being £12,000, you can see what this strategy is.
“2027 promises a compliance crunch. Our predictions suggest that this year’s EV car and van market will be significantly short of mandated targets. Yet, from the end of 2027, the mandate trajectory ramps up significantly.
“The mandate is too far ahead of the consumer, and it’s in danger of damaging our industry significantly.
“We can’t wait until 2027. We need it reviewed now and resolved now.”
Stellantis UK boss Druce, who oversees brands including Peugeot, Citroen, Vauxhall and Fiat, said: “You’re not able to profit from making and selling an electric vehicle in the UK market today. There’ll be the odd exception, but the majority will be in a situation where we’re investing so heavily that most of the vehicles sold are going to be loss making.
“If you’re in that scenario, and you carry on increasing the number of EVs through forcing supply, when the ZEV mandate is driving the industry… you are businesses. So, businesses want to invest, of course, but you decide to invest where you can make a return. And if you cannot make the return in that country, then the ability of the company to invest and create the growth that the Government is looking for in the UK is absent.
“So, I think we are coming up towards a fundamental crossroads in this pathway where we need to make some very quick decisions.
“A review next year is too late. The review needs to happen now, in order for us to make the right decisions on investments.”
Government committed to 2027 ZEV mandate review
Although Mather told the summit that the Government was listening to industry concerns, he did not announce any change to its ZEV mandate review scheduling.
He said: “We’ve committed that the review is going to happen in early 2027 but the work is going to begin on it this year.
“I meet with automotive manufacturers every week in my role. I understand how challenging the global picture is. I understand just how hard manufacturers are working to be compliant with the ZEV mandate.
“We want to work really closely with industry to make sure that the ZEV mandate works in terms of our climate targets, but that it also suits the business needs of the automotive manufacturers who are making that transition happen, and that’s work that is already taking place over the course of this year.”