The head of the Society of Motor Manufacturers and Traders is urging the UK Government to bring forward a review of the Zero Emission Vehicle Mandate (ZEV Mandate) because the current targets are unachievable.
The number of new cars registered in 2025 has exceeded two million units, the first time this threshold has been passed since 2019, and 23.4% of these were battery electric cars.
The ZEV Mandate target for 2025 was a 28% share of all new cars registered.
SMMT chief executive Mike Hawes said OEMs discounts of EVs is equating to an average of around £11,000 per car – more than £5 billion in 2025 – and this is “unsustainable” for the future of the UK’s new car market. The equivalent discounts for non-EV cars are estimated to be about £6,000.
OEMs are discounting rather than face a £15,000 per unit fine for missing the UK Government’s target, which they could be liable for if they were unable to use other temporary ‘flexibilities’ such as pooling or buying ‘credits’ from other OEMs, that are permitted by the ZEV Mandate.
Hawes (pictured) said the discounting is unsustainable, as manufacturers have a more arduous target of 33% for 2026. That target continues to rise annually to reach 80% in 2030.
The SMMT and its members are on board with the Government’s aims for carbon reduction, he insisted, but it is the speed at which they’re expected to push EVs into the market which is the issue.
OEMs have invested heavily in EVs already so need to make this work profitably. “You need to make sure the market reflects more closely the actual level of demand.”
While average new car CO2 has fallen by -10.1% from 2024 to 91.8 g/km, which will assist some manufacturers with mandate compliance, the UK’s zero emission sales target will next year require BEVs comprise one in three new car registrations. The UK already has the most ambitious transition trajectory of any major market and, with the EU’s proposal to revise its end of sale date from 2035, divergence between the UK and the much larger market on its own doorstep is broadening.
The ZEV Mandate was conceived several years, and several governments, ago, and since then consumers have suffered a significant rise in living costs, and since the pandemic new cars have become more expensive as manufacturers’ own costs for materials and energy have increased.
He called on the government to bring forward a planned review of the ZEV Mandate, which ministers had said they would carry out in 2027, to this year. Hawes
The Government has brought forward a number of measures to support the take-up of electric vehicles over the past year, including the Electric Car Grant Scheme, which provides up to £3,750 towards the cost of buying an electric vehicle, as well as significant funding for charging infrastructure.
But currently only a quarter of EVs are eligible for the ECG, and in the autumn Budget the Government announced plans to introduce a ‘per mile’ tax on electric vehicles to offset some of the reduction in fuel duty revenues caused by the transition to electric vehicles, which raised concerns in the industry that this would dampen consumer demand.
With the majority of EVs currently being sold in the fleet market, where leasing is commonplace, the car leasing industry has raised more concerns about the soft residual values of EVs when they reach the used car market, and that values could fall further in 2026, and BVRLA members have warned that leasing costs will rise as a result.