Contrary to what some are saying, the real threat to British carmakers isn’t the transition to EVs moving too quickly. It’s that the EV transition isn’t moving quickly enough.
Wera Hobhouse is the Liberal Democrat MP for Bath and Association for Decentralised Energy Vice President
Towards the end of November 2024, Vauxhall announced that it would close its factory in Luton after over a century in operation. This was obviously a terrible blow for the thousands of workers employed on the site and its supply chains, their families, and the wider community. In its wake, the CEO of Vauxhall’s parent company Stellantis, Carlos Tavares, has resigned and lots of people have been left wondering: what went wrong?
Introduced by the Conservative government on 1st January 2024, the Zero Emissions Vehicles (ZEV) mandate obliges car manufacturers to ensure that a certain proportion of the vehicles they sell are Electric Vehicles (EVs). Manufacturers who fall short of their quotas are penalised for every unit under their target that they fail to sell. It’s one of a number of similar schemes being introduced across the world – from California to China – to encourage the uptake of EVs and cut transport emissions.
When the ZEV mandate was introduced, it had broad cross-party support, with all major parties, including us Liberal Democrats, voting for it and just 38 MPs against. This reflected widespread recognition across Parliament of the need to curb emissions in road transport and make EVs more accessible and affordable. Transport is, after all, the single largest source of emissions in the UK.
But today, things are different – the ZEV mandate has been blamed for the closure of Vauxhall’s Luton plant, and the challenges facing the UK automotive industry more generally. Since, we have seen both Labour and the Conservatives rushing to distance themselves from a policy they supported just months ago.
Andrew Griffith – who served as a Minister in the Conservative government which introduced the ZEV mandate – described the policy as a “jobs killer”. Meanwhile Labour Ministers and senior backbenchers, who until then had been committed to maintaining the mandate, rushed to label it as a “Conservative policy”. The government has already begun an accelerated consultation process which looks set to weaken the mandate and introduce new flexibilities for manufacturers.
But the truth is more complex. Laying the blame on the ZEV mandate ignores the broader set of challenges that the UK automotive sector has faced since at least the 2016 Brexit referendum: increasing global volatility, rising costs, and tough global competition.
In fact, the ZEV mandate is working. At the beginning of this year, Stellantis proudly announced that they had met their EV targets, despite having criticised the mandate.
People have long lamented the higher sticker prices for buying a new EV as a barrier to uptake, but those prices are coming down as manufacturers discount their vehicles as they compete for sales to hit their targets. This is great news for the UK’s drivers, with lower prices driving up sales. September 2024 set a new record for the number of EVs sold in a single month, and over the course of 2024, EVs accounted for 1 in 5 new cars sold.
As James Richardson from the Climate Change Committee (CCC) said when testifying to the Environmental Audit Committee Select Committee at the end of last year, the ZEV mandate is a “smart piece of industrial policy” that is helping manufacturers to navigate a market that is evolving faster than many figures in industry had expected.
What’s more, the industry as a whole managed to meet the ZEV mandate in its first year. This is because of flexibilities built into the mandate, supported by the industry when the mandate was being designed. These flexibilities mean that credits to hit the 22% EV sales target for 2024 can be earned not only by selling EVs, but also if a large proportion of the petrol and diesel vehicles sold by a manufacturer produce relatively low amounts of CO2.
Taking these flexibilities into account analysis by the ECIU has found that, far from struggling to hit its 22% ZEV mandate target for 2024, the industry met it – 19% from the sale of EVs, and a further 3% from selling low-CO2 emission petrol and diesel vehicles. With overperforming manufacturers generating more excess credits than the number needed by underperforming manufacturers, no fines will need to be paid as credits will be traded between car makers at significantly reduced prices.
Contrary to what some are saying, the real threat to British carmakers isn’t the transition to EVs moving too quickly. It’s that the EV transition isn’t moving quickly enough.
The numbers are revealing: if the government supports the car industry in embracing the EV transition, the industry could grow by £16 billion by 2030 and create more than 167,000 new jobs. But if they don’t make any further progress in moving to building the EVs that our major export markets increasingly demand, over £34bn in economic output could disappear and nearly four out of five automotive jobs could be lost. That means even more pain for automotive workers who, like those at Vauxhall’s Luton plant, will find themselves out of work.
I am very concerned that the Labour government will now bow to pressure and introduce new flexibilities into the ZEV mandate. Whatever form these additional flexibilities take, the result will be the same: EVs entering the British market at a slower rate.
Getting more EVs onto the roads is essential if we’re going to decarbonise road transport, secure a prosperous future for the British automotive industry and help everyone access vehicles that can be much cheaper to run. But like all of the steps on our road to Net Zero, it requires us to maintain cross-party consensus about the importance of combatting climate change, embracing technological change, and investing in the green jobs of the future.
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