ELECTRIC SHOCK: Car manufacturers fight UK's strict electric car rules as big fines are imposed | automobile industry

When Ford announced this week that it was laying off 800 employees in the UK, the US car manufacturer also had some harsh words for the government. It has joined criticism of regulations that would force automakers to sell more electric vehicles each year. The rule, known as the zero-emission vehicle (ZEV) mandate, is simply unworkable, Ford said.

Someone should have told Ford in 2022 when the automaker strongly supported this policy. In fact, the UK government has called for forcing car manufacturers to sell more electric cars every year.

Ford said at the time that it believes a lower figure than the Department of Transportation's current proposed trajectory would not send a strong enough signal to customers, manufacturers and investors to promote an appropriate transition. Moreover, lowering the target would send the wrong signal in terms of building charging infrastructure.

The government's response to the consultation, obtained by the Fast Charge newsletter, said car manufacturers should review their policies if industry conditions change. But nonetheless, the dramatic change in position shows how the industry is suffering from slowing growth in demand for electric vehicles.

With interest rates at record lows, automakers have found that they can sell every car they can make (despite problems getting parts) during the chaos of the coronavirus pandemic. Now that has changed. Automakers are not experiencing the expected demand for electric vehicles and are instead seeing a resurgence in sales of hybrids, which combine gasoline engines and smaller batteries.

Demand for electric vehicles has been hit not only by concerns about the number of public chargers, but also by a political backlash from critics of net-zero carbon policies who say they are too expensive – turning into an all-out culture war. Battery cars are more expensive upfront (even though they are much cheaper in the long run) despite manufacturers being forced into steep discounts that they claim are unsustainable.

Car manufacturers have launched a back-lobbying effort to persuade the UK government to ease regulations, but now find themselves pitted against car charger companies, vehicle owners and environmental campaigners who say climate targets and billions of pounds of investment will be jeopardized. The British government retreats.

Under the mandate, electric vehicles must account for 22% of new vehicle sales this year, rising to 28% by 2025, although there are significant loopholes that could significantly reduce the target. If the goal is not met, automakers face fines of up to $15,000 per vehicle. The automaker's target of 80% battery electric vehicles by 2030 is not publicly claimed, before new gasoline and diesel engines are completely banned in 2035.

Zero emission car sales target graph

The order is certain to be a key focus of the Society of Motor Manufacturers and Traders (SMMT) when members of the lobby group meet at their annual black tie dinner on Tuesday evening. Executives at the hotel in Park Lane, London, are expected to be ribbed by presenter, comedian and TV presenter Tom Allen.

In industry, the ZEV mandate is no joke. After months of requests, several car manufacturers met Transport Secretary Louise Haigh and Business Secretary Jonathan Reynolds in London on Wednesday to ask for more leeway.

As you can see in this screenshot of the consultation response, in 2022 Ford is required to increase the rate of electric vehicle sales in line with the ZEV Mandate. The process has since changed. Photo: Ford; Ministry of Transportation; fast charge

Japanese manufacturer Nissan, which operates Britain's largest car plant in Sunderland, said the order was threatening the viability of thousands of jobs and billions of pounds of investment, even though industry insiders thought it was unrealistic for the company to actually abandon the plant. Stellantis, owner of the Vauxhall, Peugeot and Citron brands, said last summer it could close its van factories in Ellesmere Port and Luton because of the order. insisted.

But car manufacturers are not the only group claiming billions of pounds are being lost. Companies are competing to install the chargers needed for electric vehicles.

Vicky Read, chief executive of lobby group Charge UK, was also in the room with ministers. She said $6 billion of investment is planned on the premise of the ZEV mission. She said flip-flopping, like Conservative Chancellor Rishi Sunak's decision to delay a ban on new petrol cars by five years, would damage investments.

We must not repeat the same mistakes, she said. Reducing the number of fully electric cars on UK roads is the last thing we should do. Because that means fewer customers.

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Calculating how much pressure individual automakers are actually under is tricky. The headline target is 22% of electric vehicle sales, but in practice you can get credits to lower that. These credits include lowering the average emissions of new gasoline vehicles and leasing excess electric vehicles produced later. Another option is to buy credits from other brands (although the UK industry is bristling at the thought of subsidizing competitors such as BYD in China or Tesla in the US).

Electric vehicle sales slowdown graph

Despite all the loopholes, think tank New AutoMotive calculated that the actual target for 2022 is 18.1% in electricity sales, exactly the same as the 18.1% achieved in the first 10 months of 2024. SMMT disputes these calculations, pointing out the gap between sales figures. Although the figures and think tank did not provide estimates.

New Automotive CEO Ben Nelmes said there was a lot of uncertainty and the target could be reduced further or lower depending on manufacturers' decisions. Nonetheless, he said it is realistic to think that if current trends are maintained, the actual target for 2025 could be between 24 and 25% rather than the headline 28%.

Automakers are now demanding more of this convenient flexibility. Ideas presented to ministers this week include allowing car manufacturers to comply if they exceed future targets and providing additional credit for UK-made electric vehicles, a policy that could be attractive given the political importance of retaining British jobs. It was included.

Business departments are thought to be open to relaxing the rules, but the industry has so far found transport departments less responsive to pleas as they keep an eye on climate targets.

Colin Walker, transport director at the campaign group Energy & Climate Intelligence Unit, argued the order was effective and good for British consumers.

The order is encouraging manufacturers to compete on price, and as prices fall, sales are rising, with more than one in five new cars sold in the UK in the past three months being EVs, he said.

Whatever happens, the industry will not be able to ease the pressure on governments given job losses, falling revenues and surging investment needs globally. It is likely that some of them will be fined as per regulations.

David Bailey, professor of business economics at the University of Birmingham, said he believed more flexibility was warranted. The uptick is really strong, he said. I think companies will struggle to achieve that.

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