3 days ago
Transport secretary Louise Haigh has said that she will look at ‘flexibilities’ as car manufacturers struggle to hit their ZEV targets, leading to a stagnation in new car sales in Q4 2024.
The minister is due to meet representatives of Nissan today (Nov 18), with the company ready to warn her that the industry is at ‘crisis point’, as car companies are deliberately withholding sales of new petrol and diesel models to avoid sanctions.
The move comes ahead of a meeting with the broader car industry and Jonathan Reynolds, the business secretary, set take place on Wednesday.
Haigh told The Times newspaper that she would look at increasing ‘flexibilities’ which could effectively see a reduction in the number of electric cars required to hit ZEV targets and potentially see a return of incentives to buy electric cars, such as grants or subsidies.
Under current plans, 22 per cent of new car sales in 2024 must be zero emissions, with all but a handful of those being battery electric. The vast majority of manufacturers are on course to miss the target, some by a substantial margin.
This isn’t good news for car makers, as the target is set to increase in stages, to 80% in 2024. The situation is currently having a substantial impact on new car sales, with manufacturers reportedly withholding supply of new petrol models and actively not selling them to avoid penalties.
Among the options on the table for discussion are amendments to percentage targets, as well as the opportunity to buy ‘credits’ to compensate for not reaching EV volume targets.
If the government does relax ZEV targets then it is likely to face criticism from environmental pressure groups and EV-only manufacturers such as Tesla and BYD, which are not affected by the targets. There are fears, too, than any relaxation in the regulations could slow down the roll-out of the UK’s EV charging infrastructure, which is already behind target.
The Labour government has yet to comment on if it plans to extend its plans to reach net zero beyond 2030.
The industry isa arguing that the ZEV mandate needs to be overhauled because demand for electric cars is lower than was expected. Haigh acknowledged to The Times newspaper on Sunday that there had been ‘a downturn in demand on a global level’ and said the government was ‘in listening mode’ with car companies ahead of this week’s meeting.
Leading brands including Ford, Kia, Nissan, Mercedes-Benz, BMW, Toyota, Volkswagen and Jaguar Land Rover wrote to Rachel Reeves, the chancellor, last month to warn that electric vehicle market share was ‘barely moving’ at around 18% of sales.
‘Brands face the prospect of either buying credits from another company or paying swingeing compliance payments,’ they wrote. ‘Any amount will have to be provisioned, with a consequent cut in investment, R&D or jobs.’
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