British car companies criticize electric vehicle mandate economy

UK car companies have expressed their dissatisfaction with the British government’s electric vehicle (ZEV) mandate that requires companies to gradually increase electric car sales until they reach 100% by 2035, according to Bloomberg.

This mandate – according to Bloomberg – comes within the British government’s plan to achieve zero emissions, but weak demand for electric vehicles and limited infrastructure have raised companies’ concerns about achieving the set goals.

Authorization details

The EV mandate aims to accelerate the industry’s shift towards fully electric vehicles, and specific rules include:

• The mandate calls for 22% of cars and 10% of pickup trucks sold in 2024 to be fully electric vehicles.

• The percentage will gradually rise to 80% for cars and 70% for trucks by 2030, with sales of vehicles based on internal combustion engines stopping by 2035.

Penalties and compliance mechanisms

To encourage compliance with the mandate, the government has established several mechanisms and penalties to reduce violations, including:

• Companies that do not meet the required percentages face fines of up to 15,000 pounds ($19,000) for each car and 9,000 pounds ($11,400) for each non-compliant truck.
• Providing companies with options such as “borrowing” percentages from the coming years, on the condition that they are compensated later by achieving higher percentages in the future.

Industry challenges

Despite the efforts made, the numbers indicate that the industry still faces difficulty in achieving the set goals, which include:

During the first 10 months of 2024, only 18% of cars sold in the country were electric. Only 5.6% of trucks sold were electric.

Stellantis, which owns brands such as Peugeot and Jeep, also announced the closure of its factory in Luton after 120 years of production, noting that delegation was one of the main reasons for this decision.

Government position

In response to growing concerns from businesses, the government announced its intention to amend the rules, and Business Secretary Jonathan Reynolds explained the government’s steps as follows:

• Initiate urgent consultations with manufacturers to amend the mandate and provide the necessary support.
• Submit proposals before the end of the year to ensure clarity on the new rules for manufacturers.
• Commitment to the timetable to reach net-zero emissions by 2035.

Corporate demands

Car manufacturers expressed their concern about the high costs they bear to meet the mandate goals in light of demand not matching the set goals.

The companies explained that they are committed to reducing emissions, pointing to the huge investments spent on re-equipping their factories to manufacture electric vehicles, but this commitment collides with the weak demand for purchasing these vehicles, according to Bloomberg.

Reports indicated that companies either offer deep discounts to stimulate sales or face fines of up to 15,000 pounds ($19,000) for each car that does not comply with the mandate.

In this context, some companies have proposed amendments to the mandate, such as merging targets for cars and trucks and allowing exported vehicles to be counted among the established targets, calling on the government to provide additional incentives to encourage local manufacturing of electric vehicles in the UK.

Despite the challenges, the government confirmed that it will remain committed to the deadlines for achieving zero emissions goals, and that it will work to support the sector to overcome current obstacles, according to the agency.

Possible adjustments are expected to include making rules more flexible in the early years of the mandate to reduce burdens on businesses, and perhaps providing temporary tax cuts to incentivize consumers to purchase electric vehicles.