Fresh incentives to boost a flatlining electric car market are urgently needed, according to the UK automotive industry, whose leaders called on the government to act fast and “revisit the mandate” for zero emission vehicles (ZEV).
The Society of Motor Manufacturers and Traders (SMMT) said its research showed growth in consumer demand for EVs was lower than expected, with only one in eight new buyers planning to switch in the next three years, putting jobs at risk.
The UK mandate requires manufacturers to ensure 28% of new cars sold this year are zero emission or face a £15,000 penalty for every vehicle.
The SMMT’s chief executive, Mike Hawes, said: “The consequences of this regulatory framework and an inability to meet it, you’re beginning to see play out in terms of flattening of sales, production down, plants closed or consolidated, jobs lost. This should be a driver of growth, not a driver of de-industrialisation.”
The manufacturer Stellantis partly blamed the mandate for its decision in November to close its van factory in Luton, affecting about 1,100 jobs.
Hawes said: “We need to revisit the mandate … not to abandon it, but the circumstances have changed.”
He said that while road transport had to “accept the biggest burden” in reducing carbon emissions and working towards net zero, conditions had changed since the mandates were established. “We had lower energy costs, strong consumer demand, strong organic growth for EVs … Without incentives, private consumer demand for EVs is weak,” he said.
The industry incurred costs of £4.5bn last year in discounting electric vehicles to customers to meet the sales targets, the SMMT said. Grants for early adopters have long ended and EV owners will be liable for vehicle excise duty including levies on premium cars from April.
Carmakers want VAT to be halved on new vehicles, and for it to match the 5% household electricity rate for public EV charging points, among incentives to win over “EV sceptics”.
Hawes said SMMT research showed that the market for new EVs was largely reliant on drivers who had already gone electric, with only 12% of new buyers polled actively intending to switch from petrol or diesel by 2028.
Speaking at an industry conference in London, carmakers said they were committed to electrification but the targets were now “challenging”.
Lisa Brankin, Ford’s managing director in Britain and Ireland, said: “The trajectory and sentiment has very much changed.”
Ford cut 800 UK jobs in November amid slowing growth in demand. But, she added: “We need to find a way to make it a success. We have to turn it round into an upward spiral and that’s about generating customer demand. We need to encourage the goverment to act quickly.”
David George, the UK and Ireland chief executive of BMW, said: “We’ve made huge investments in the transition – but retail demand really isn’t in line with the ZEV mandate. We’ll see incredible challenges this year if the landscape doesn’t change.”
Paul Philpott, the chief executive of Kia UK, said: “We’re feeling we’ve got swords hanging above our heads … We’re forced to incentivise and discount the very best technology we have.”
Lilian Greenwood, the future of roads minister, told the conference that more than one in four cars sold last month was an EV, and there are now more than 75,000 public EV chargers, promising to “maintain this momentum” and give the industry “the clear trajectory they deserve”.
She said the government was “running hell for leather to deliver the charging infrastructure we need to meet our ZEV targets”.
Greenwood said that pledges to ban the sale of new conventional cars from 2030 and vans from 2035 were “iron clad”, adding that the ZEV mandate was crucial and the pathway to 2030 was fixed. She said that responses to its consultation on how post-2030 measures could be relaxed would be published later in the spring.
