The Department for Transport (DfT) has confirmed that a zero emissions vehicle (ZEV) mandate, will require more than a fifth (22%) of cars and 10% of vans sold by manufacturers to be electric, will come into force next year.

The decision to push ahead with the ZEV mandate targets comes despite the Government delaying the ban on the sale new petrol and diesel cars and vans from 2030 to 2035.

Business Secretary Kemi Badenoch indicated to the BBC last week, that electric vehicle (EV) sales will be targeted from 2024 and increase each year thereafter.

Today, the transport secretary, Mark Harper, confirmed the detail around targets for manufacturers which will increase each year, requiring 80% of new cars and 70% of new vans sold in Great Britain to be zero emission by 2030, increasing to 100% by 2035.  

The ZEV mandate requiring 100% of new cars and vans to be sold to be electric by 2035, comes after the Government decided to delay the ban on the sale of new petrol and diesel cars and vans by five years, from 2030 to 2035. 

Vehicle makers that fail to achieve the ZEV mandate sales targets will be subject to fines, with a system of proposed flexibilities and credits to support those that sell a low volume of EVs.

If a company misses the target, it will be made to pay the Government £15,000 for every car that doesn't comply. For vans, manufactuers will have to pay £9,000 per vehicle next year, before the van payment increases to £18,000 for the rest of the regulation’s timeframe. 

While the DfT has amended the trajectory originally suggested for electric van sales, it says that it still considered it appropriate to proceed with a 10% target from 2024.

 

The measures, say the DfT, give the wide range of manufacturers flexibility through a trading scheme, enabling them to bank compliance in years when they exceed annual targets for use in future years or trade them with other manufacturers that have fallen short. In the first year car manufacturers can borrow for up to 75% of their annual target, falling to 25% in 2026, to support them in the early stages.

Annual car targets
2024:22%	2025:28%	2026:33%	2027:38%	2028:52%	2029:66%	2030:80%

Annual van targets
2024:10%	2025:16%	2026:24%	2027:34%	2028:46%	2029:58%	2030:70%

 

DfT says it is a market-based/tradable scheme, meaning that compliance will not be assessed by directly monitoring vehicle sales. Instead, manufacturers will receive ‘allowances’, permitting them to sell up to certain number of non-ZEVs per year (the inverse of the ZEV target) and will ‘spend’ an allowance for every non-ZEV they sell.

Any manufacturer selling more ZEVs than required (and therefore selling fewer non-ZEVs than they were permitted to) will have spare allowances that they can sell on the open market to manufacturers that have not sold enough ZEVs.

Harper said: “The path to zero emission vehicles announced today makes sure the route to get there is proportionate, pragmatic, and realistic for families.

“Our mandate provides certainty for manufacturers, benefits drivers by providing more options, and helps grow the economy by creating skilled jobs.

“We are also making it easier than ever to own an electric vehicle, from reaching record levels of chargepoints to providing tax relief for EV owners.”

Alongside the ZEV mandate, regulation will also apply to non-ZEVs to ensure that their emissions do not get any worse. On a manufacturer-by-manufacturer basis, non-ZEV CO2 emissions will be baselined according to 2021 emissions, using the higher value of either the manufacturer’s non-ZEV CO2 average, or their whole fleet CO2 target.

This target will then apply to manufacturer’s non-ZEVs until at least 2030.

In line with the Climate Change Act, this will also be a market-based mechanism, allowing manufacturers to trade allowances as necessary.

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), said: “The automotive industry is investing billions in decarbonisation and recognises the importance of the zero emission vehicle mandate as the single most important measure to deliver net zero.

“We welcome the clarity the mandate’s publication provides for the next six years and the flexibilities it contains to support pragmatic, equitable delivery across this diverse sector.

"Manufacturers offer a vast range of zero emission vehicles, but demand must also match supply – that means making ZEVs affordable by incentivising drivers to make the switch now and delivering the infrastructure to meet consumer expectations.”

Gerry Keaney, chief executive at the British Vehicle Rental and Leasing Association (BVRLA), added: “Last week’s announcement by the Prime Minister created a wave of uncertainty. Businesses planning their decarbonisation journeys need to be sure of their destination and deadline. This ZEV mandate clarity will wrestle back some of the confidence that last week’s Phase-Out delay dented. 

“The decarbonisation divide is growing. The company-provided car sector is well on its way and will be fully ZEV ahead of official targets. Others face much harder transitions.

"Vehicle rental, the retail market, and commercial vehicles have a mountain to climb if they are to adopt zero-emission vehicles in the volumes required. Targeted financial support and incentives will play a vital role.  

“For those challenging market segments, the breathing space afforded by the ZEV Mandate van trajectory changing, car club parameters being adjusted, and commitment to an accessible transition will be welcome.

“The Prime Minister may have applied the brakes to the Government’s phase-out targets, but the fleet sector still has its foot on the throttle.

"The pace of the transition will continue to accelerate in the years ahead.

"The road to zero is building momentum and we will continue to work with Government officials and stakeholders in the automotive and energy sectors to make sure it is not lost."  

In the first half of 2023, 16% of all new cars sold were electric. Only 11 car makers exceeded the proposed 22% target for EV sales, however, and a third of all the EVs sold in the UK between January and July came from just three brands.

Manufacturers such as BYD, GWM ORA, MG, Polestar, Smart and Tesla are significantly ahead of the target, due to their model ranges being mainly or entirely electric.

BMW, Cupra, Jaguar, Porsche and Volvo are also close-to or already achieving the target, based on current registration figures.

Brands with no EVs include Alfa Romeo, Dacia and Seat, but they are all part of larger automotive groups and may benefit from credit sharing arrangements.

Japanese brands Honda, Mazda, and Toyota Lexus face a particular challenge, as the bulk of their sales come from internal combustion engine (ICE) models.

Ford, equally, has a strong ICE mix, with EVs making up just 2% of its registrations in the first half of 2023.

Stellantis brands Citroen, Peugeot and Vauxhall all have multiple EVs in their respective line ups, yet the group’s EV registrations currently make up only 15% of its total sales.

Ian Plummer, commercial director at Auto Trader, said: “Confirmation of the ZEV mandate at least gives the industry the clarity it needs, even though some manufacturers will struggle to hit these targets as they are behind the curve on EV sales. To close the gap and avoid fines, we could see prices come down to encourage consumer demand.

“But combined with the delay to the ban on new diesel and petrol sales until 2035, the Government is sending mixed messages in a crucial policy area. The key now will be to support consumers in making the switch. That won’t be easy given the current barriers of high upfront cost and charging infrastructure – despite the significant savings to be made from running an EV.”

He added: “When it comes to the vans mandate, the softening of the annual targets is a pragmatic step that will provide much needed breathing room for certain manufacturers.

"It also gives the fleet and business sectors – the biggest van buyers – more choice while electric van technology catches up with business requirements, and electric vans become more affordable for small businesses.”