By Sachin Ravikumar
LONDON (Reuters) – Britain will reconsider rules that force automakers to produce more electric vehicles after the industry warned that the plan would lead to factory closures and job losses without stronger demand from consumers.
Zero Emission Vehicle (ZEV) mandates, which require automakers in Britain to sell a higher proportion of EVs each year or face fines, will be put to a consultation, the government said on Wednesday.
Because public demand for EVs has not kept up with expectations, the car industry has warned that the rules could cost automakers 6 billion pounds ($7.6 billion) this year, and threaten both jobs and Britain’s appeal as a manufacturing hub.
Some of those warnings may have already come to pass, with the owner of Vauxhall announcing plans on Tuesday to shut its van factory in southern England, risking more than 1,000 jobs, and Ford last week saying it would cut 800 UK jobs.
Business minister Jonathan Reynolds said Vauxhall parent Stellantis had raised ZEV mandates as a key issue in talks with the government ahead of its decision to close the plant in Luton.
He blamed the previous Conservative government, which left office in July, for giving mixed policy signals to both automakers and consumers by allowing more time for a ban on petrol car sales to take effect, while also leaving the ramp-up of ZEV mandates unchanged.
“They changed the destination and kept the fines and the ramp-up and the thresholds exactly the same,” Reynolds told lawmakers, reiterating a manifesto commitment to reinstate a 2030 deadline to phase out the sale of new petrol and diesel cars.
“What they did was give no flexibility or pragmatism in how that policy operated, but still undermined the transition, leading to a massive reduction in consumer confidence.”
EV demand has been weaker than expected because of concerns over charge-point capacity and high costs and interest rates, forcing automakers to offer discounts to boost demand – which they say is unsustainable.
Companies such as Ford and Stellantis have repeatedly called for more tax incentives and public charge-points to boost demand.
The industry would have to pay out 6 billion pounds this year in discounts and compliance costs due to ZEV mandates, the SMMT trade body has said, warning that “jobs are on the line”.
Globally, too, automakers are facing subdued EV demand and a challenging trading environment due to high raw material and energy prices, trade tensions, and competition from cheaper Chinese rivals.
Unlike the European Union, where automakers can meet CO2 emissions reduction targets by selling a mixture of hybrids and EVs, Britain is demanding from this year that automakers sell a minimum percentage of fully electric cars or face fines of 15,000 pounds ($19,033) per non-compliant vehicle sold.
The UK rules require EVs to make up 22% of an automaker’s new car sales in 2024, a target which rises to 80% in 2030.
But companies will likely fall well short of the target this year, with EVs making up only 18.7% of overall sales, SMMT forecasts show.
($1 = 0.7899 pounds)
(Reporting by Sarah Young. Additional reporting by Alistair Smout. Writing by Sachin Ravikumar. Editing by Kate Holton and Mark Potter)
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