After weeks of speculation and debate, the UK government officially announced on August 14 that it is reviewing the ZEV mandate and its effectiveness, launching a consultation that will run until October 23 to gather views on the matter from stakeholders including vehicle manufacturers, suppliers, chargepoint operators, dealers, consumers and communities
"The UK EV market is strong – sales are up, British manufacturers and chargepoint operators are investing billions, alongside our backing of £7.5 billion, including our Electric Car Grant that has helped over 160,000 people make the switch," said Heidi Alexander, UK transport secretary.
"It’s right we keep targets under review to ensure they’re practical and back British industry," she added. "The end goal hasn’t changed but we need to take business with us on the journey and that’s exactly what we’re doing today by making sure industry has the chance to shape how we get there."
The consultation has been structured in five parts. The first part will set out the impact of the ZEV mandate in the UK, while the second will outline emerging issues. In part three, the government will seek views on areas including: the current ZEV trajectory and yearly headline targets; the effectiveness of existing compliance flexibilities; alternative policy approaches to address the challenges identified in part two; and any other potential technical updates.
Part four will then examine the carbon impact of any policy options emerging from part three, before the final stage, when options will be set out for phasing out new cars relying solely on internal combustion engines by 2030.
The UK government has said that evidence from this consultation may be used to inform potential future amendments to the Vehicle Emissions Trading Schemes (VETS) Order – the piece of legislation that sets out the ZEV mandate.
"The UK’s automotive sector is vital to our economy and future growth and we’re determined to keep it that way as we get on with reindustrialising Britain to deliver good growth in every postcode," said Jonathan Reynolds, UK business, innovation, science and trade secretary. "This consultation is about listening to industry, examining the evidence and making sure the mandate continues supporting investment, innovation and competitiveness, so Britain’s car sector can thrive."
What options has the UK government set out in its consultation?
One of the key issues at the centre of the ZEV mandate review is whether to water down the 2030 target of 80% ZEV sales. The consultation sets out three options for consideration, should this target be weakened: 70%, 60% and 50%. As well as these three alternative options, the government is also seeking views on a fourth option that would maintain the 80% headline ZEV target by 2030 but extend key flexibilities such as borrowing, banking and CO2 conversion to 2034.
The UK government has also outlined four options for amending the zero-emission targets for vans. It will be considering dropping the 70% zero-emission van target by 2030 to 60%, 50% or 40%, or alternatively maintaining the 70% target but again extending key flexibilities to 2034.
The government has made clear that any amendments to the trajectories will not change the destination, reiterating that it will not amend its headline commitment to end the sale of new purely petrol and diesel cars by 2030 and for all new cars and vans to be fully zero emission by 2035. These, it said, remain critical long-term consumer and investment signals.
Support for changes to the mandate
The debate around the ZEV mandate and whether it should be changed has so far been a divided one in the UK, with some arguing that it provides much-needed consistency while others consider it flawed and unrealistic.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), has been an advocate for change to the ZEV mandate. He issued a statement welcoming the government’s consultation on the ZEV Mandate and how it should change to better support the UK’s transition.
He shared his view that the regulation was conceived under very different conditions to what the industry is experiencing today. He noted that at the time, energy was cheaper, production costs were rapidly declining and global EV demand expectations were more optimistic.
"Regulatory targets are now running ahead of current consumer demand, so this review is a timely opportunity to optimise the pace of change," Hawes said. "This is a regulation that increasingly dictates consumer choice – and therefore automotive companies’ future strategies and viability – so it must work for all involved."
"That means a commercially sustainable transition that supports UK competitiveness, investment and jobs while delivering greater choice and affordability for motorists – with a rapid resolution needed to unlock those benefits for everyone," he continued.
Echoing Hawes' sentiment, the CEOs of four vehicle retail and rental companies (Enterprise Mobility, Zenith, United Rental Group and Vertu Motors) signed a joint statement also welcoming the review, claiming that it is "urgently needed" to restore confidence in the UK’s EV transition.
These industry leaders acknowledged the "significant progress" made in the UK's electrification journey so far, but claimed that this has only been made possible through the billions of pounds in investment made by the automotive industry, supply chain, vehicle finance providers, customers and the taxpayer. Because of this, they said that the UK does not have a "sustainable market footing for increasingly ambitious targets".
They also noted that the UK's ZEV mandate does not align with current EU policy, after the EU moved away from its original plan to require a 100% reduction in tailpipe CO₂ emissions from new cars by 2035, instead introducing a 90% reduction target.
They also noted that the UK's ZEV mandate does not align with current EU policy, after the European Commission moved away from its original plan to ban the sale of ICE vehicles by 2035, instead adopting a 90% tailpipe emissions reduction target.
"Stellantis fully supports the transition to electric vehicles; we have over 60 fully electric vehicles in our line-up today and have been selling them each and every year in the UK for the last three decades with more than 230,000 on UK roads to date," Druce said in a post on LinkedIn. "However, despite growing interest in the benefits of electric vehicles, real customer demand is at odds with the mandate, meaning that compliance is coming at an increasingly significant and unsustainable cost."
As well as calls for relaxation of the ZEV mandate and greater flexibility, others have argued that any changes should also make the policy more technologically neutral, allowing manufacturers greater flexibility over the technologies used to reduce vehicle emissions. This could include greater recognition of plug-in hybrids and other low-emission technologies alongside battery-electric vehicles, rather than prioritising zero-emission vehicles as the primary route to decarbonisation.
In a letter sent to several UK secretaries of state in April this year, senior figures at BMW Group, Bosch, Ford, Nissan and Toyota urged the government to adopt an "open technology approach" to provide consumers with access to a range of affordable low- and zero-emission vehicles.
Calls to maintain the mandate
On the other hand, some key figures in the industry have expressed disappointment in the decision to review the ZEV mandate, believing it should be upheld in its current form. For example, Vicky Edmonds, CEO of the Electric Vehicle Association (EVA) England, argued that the organisation's members and surveys show that there is still "significant untapped demand for electric vehicles", but claimed that drivers need a better deal.
"The government should look honestly at why EV demand has not grown as quickly as expected," she said. "But the answer is not to lower the ambition of the ZEV mandate – which has been absolutely critical for creating a market of EVs that people want to buy. It has to be to fix the things that are stopping drivers from making the switch."
In addition, Transport & Environment (T&E) – the UK national office of European advocates for clean transport and energy – has indicated that weakening ZEV targets could diminish the UK's domestic automotive industry's ability to compete with new market entrants from China.
"Weakening the ZEV Mandate would do nothing to ease pressure on UK producers," said Tim Dexter, T&E's UK vehicles policy manager. "Instead, the absence of a coherent industrial strategy – alongside targeted trade measures seen in the EU – risks decimating the UK automotive sector during a period of global market realignment."
Matt Galvin, UK managing director of electric car brand Polestar, has also been outspoken in his support for maintaining the current ZEV mandate, saying that reversing the transition to electric vehicles in the UK would be a "historic policy failure" and claiming that there is simply no justification for prolonging the UK's dependance on petrol and diesel.
"Weakening these targets allows car manufacturers to decelerate development of EVs at a time when they should be doing exactly the opposite and accelerating their investment and product offering," he told The Guardian in July.
Outside of OEMs and industry bodies, a key perspective that the UK government is welcoming in its consultation is that of EV charging infrastructure stakeholders. James Alexander, CEO of the UK Sustainable Investment and Finance Association (UKSIF), has said that the government's decision to review the ZEV mandate will "heighten the risks for investment in the UK’s charging network".
Alexander acknowledged the importance of an adequate EV charging network to support the UK's EV transition, and claimed that the ZEV mandate is "crucial" for attracting investment in this area as it sets out, in his words, "a clear, predictable pathway for the growth of the EV market".
Alexander's warning about the risks to investment in UK EV charging infrastructure has been echoed by Delvin Lane, CEO of public EV charging network Instavolt. “Ultra-rapid charging investment doesn’t happen on the back of uncertainty," Lane said. "We’ve invested hundreds of millions of pounds into the UK’s charging network because government policy gave us a clear runway to plan against. Softening the mandate at this stage risks spooking exactly the private capital that’s been building the infrastructure this transition depends on."
How the ZEV mandate impacts automotive supply chains
The government's final decision on whether or not to soften the ZEV mandate – and if so, how significantly – following the current consultation will impact the UK's automotive logistics and supply chain sector in a number of ways.
Firstly, the relationship between the ZEV mandate and consumer demand is important. As well as ensuring OEMs are transitioning toward EVs at the right pace, the regulation sends a signal to consumers about the direction of vehicle mobility in the UK. As some supporters of the ZEV mandate have mentioned, softening the ZEV mandate could be seen by some as a signal from the government that the EV transition is a less urgent priority.
If this were to translate, as these concerns suggest, into slower consumer uptake of EVs, a more gradual shift to EV production or decreased investment in EV charging infrastructure, the government's 2030 and 2035 ZEV commitments could become harder to accomplish.
However, if – as the ZEV mandates critics believe – reforms are needed to ensure supply and demand of EVs are closer aligned, a more realistic approach to the transition could give manufacturers greater flexibility to respond to consumer demand and maintain commercial viability while continuing to invest in electrification.
Of course, consumers aren't the only ones whose EV decisions may be influenced by the government's review. Fleet operators too will have a decision to make between now and the end of the decade about their plans for zero-emission fleets. Not only will the decision on the ZEV mandate indirectly affect how logistics providers adapt to changes in the volumes and types of electric vehicles and parts moving through their networks, it will also affect these firms' plans for their own vehicles transporting such cargo.
Ultimately, both sides of this debate are looking for certainty. Those in favour of the mandate as it is are hoping for the government to send a clear signal that the roadmap it previously set out is the path to an electric future, while those in favour of change want to be certain these goals are achievable and support the UK automotive sector in competing with threats from abroad. It is up to the government to decide which direction is most appropriate as the 2030 and 2035 deadlines draw nearer and nearer.
