The electric vehicle industry in the UK is experiencing significant turbulence, as key players voice their concerns over the government’s Zero Emission Vehicle (ZEV) mandate. With estimates predicting up to £6 billion losses due to its stringent targets, manufacturers are sounding alarms over the potential impacts on jobs and business viability.
Earlier this week, during the annual dinner of the Society of Motor Manufacturers and Traders (SMMT), Business Secretary Jonathan Reynolds candidly shared his apprehensions about the effectiveness of existing policies governing electric vehicles. He stated, “I don’t believe the policies...are operating today in a way anyone intended them to.” This bold assertion follows Vauxhall's recent announcement of its intention to close its Luton factory, putting 1,100 jobs at risk. The closure has been attributed, at least partially, to the challenges presented by the current ZEV requirements.
The ZEV mandate stipulates ambitious targets, requiring manufacturers to demonstrate at least 22% of new car sales come from zero-emission vehicles by the end of 2024, with this percentage skyrocketing to 80% by 2030. Government figures suggest electric vehicle sales may only capture 18.5% of the market this year, highlighting the shortfall against goals, which poses considerable strain on manufacturers.
Mike Hawes, Chief Executive of SMMT, shared the growing concerns of the industry, stating the situation creating “worrying and grave” conditions for manufacturers across the board, not least as more companies announce layoffs and production cuts amid falling consumer demand for electric vehicles. Recently, Ford confirmed they would be scaling back their workforce due to these very challenges.
The economic reality for many within the industry is becoming increasingly precarious. New data from the SMMT indicates estimates of electric van and car registrations are way behind initial expectations – only 363,000 new electric cars are predicted to be sold this year compared to the anticipated 457,000. The situation for electric vans is particularly dire, with forecasts dropping to approximately just 20,000 registrations, which is far below the set target of 10% market share.
Losing ground, industry leaders are asking for urgent support from the government. Experts suggest policy adjustments are not only unwarranted but necessary for survival. The SMMT accentuates the need for direct government interventions to salvage the situation. Mike Hawes remarked, “We need to balance delivery with targets, focusing more on what can be brought to market.” This plea for flexibility stems from fears of businesses withdrawing from the UK market entirely if regulations remain unchanged and penalties are enforced for non-compliance.
Investment from manufacturers also hangs precariously on these regulatory outcomes. For example, Ford has already invested £1.6 billion to ramp up production of electric vehicles at its Cologne facility, but these advancements are muddied by concerns of demand—both from customers and regulatory perspectives. Lisa Brankin, Ford UK's managing director, emphasized the necessity for government-backed incentives to stimulate consumer demand, stating, “Without demand the mandate just doesn’t work.”
Across the channel, significant shifts are also observable. Stellantis, the owner of Vauxhall, plans to consolidate operations and redirect efforts toward electrification by transforming its Ellesmere Port plant. This move involves creating an all-electric hub and includes significant investments, but local plant closures have upset thousands of workers. Brankin noted these strategic layoffs and closures were part of the broader shift faced by the industry on both sides of the Atlantic as electric vehicle mandates tighten.
Calls for assistance don’t only echo from car manufacturers; they are reflecting the broader ambitions surrounding the UK's electric vehicle plans. With the current targets positioned as part of the move toward net-zero emissions by 2050, pressure mounts on the government to mitigate risks and provide clarity on future expectations and support.
