Government sets out plan for a ‘zero emission vehicle mandate’ from 2024

Manufacturers could be forced to sell a rising share of electric vehicles each year to speed-up the shift to zero-emission passenger cars under plans announced in the Government’s Net Zero Strategy.

The Department for Business Energy & Industrial Strategy confirmed it will consult on the introduction of a ‘zero emission vehicle mandate’ from 2024 – and it could fine car makers who do not move quickly enough to phase out internal combustion engine cars.

Ministers see the policy as the most effective way of shifting the UK’s car parc to EVs – while also allowing taxpayer-funded grants to be reduced.

‘Our zero emissions vehicle (ZEV) mandate will guarantee greater number of zero emission vehicles on our roads, unlocking the transformation of our road transport,’ the strategy paper said. 

It was reported last week that Chancellor Rishi Sunak has been at loggerheads with Transport and Businesses Secretaries Grant Shapps and Kwasi Kwarteng over planned cuts to the Plug-in Car Grant.

The scheme, which has been available since 2011, was last slashed by £500 in April, down from £3,000 to £2,500. Additional rules were also put in place so that only buyers of electric vehicles up to the price of £35,000 are eligible for it.  

The Treasury is said to be eager to scale down grants to focus funding towards bolstering the country’s charging infrastructure as well as reduce outgoings in the wake of the pandemic.

Yet both Shapps and Kwarteng are concerned it could derail the recent growth in EV demand and send the wrong message ahead of the COP26 summit in Glasgow later this month and the ban on sale of petrol and diesel passenger vehicles from 2030.

A ZEV mandate – like the one introduced in California in the 1990s – is considered a best solution, putting the onus on car makers to sell an increasing proportion of electric vehicles each year, for which they will receive credits.

This would – in theory – accelerate the availability of EVs across different price points, with manufacturers forced to introduce battery-powered models that are suitable – and affordable – for all different types of car buyers. 

Failure to meet yearly-increasing sales targets could result in financial penalties and there would likely be a separate target introduced for the carbon emissions of makers’ model ranges.

MPs believe the mandate would provide a clearer indication of how many charging points will be needed to ensure the infrastructure keeps pace with plug-in car sales. 

It would also give the Treasury an accurate picture of how rapidly it will lose revenues earned through motoring taxes on fossil fuel cars – both vehicle excise duty [car tax] and fuel duty – which contribute billions of pounds to its coffers every year.

Announcing the strategy in the House of Common, Greg Hands, junior energy minister, said: ‘The [Net Zero] strategy sets out that we will also introduce a zero emission vehicle mandate that will deliver on our 2030 commitment to end the sale of new petrol and diesel cars and vans.’

Shadow minister, Ed Milliband, responded: ‘We agree with the transition to electric cars and I support and welcome the zero emission vehicle mandate. 

‘But we need to make it fair for consumers. We should at the very least have had long term zero interest loans to cut the cost of purchasing electric cars.’ 

The Transport Committee called on MPs to increase efforts to make electric car ownership more attainable for Britain’s drivers in a paper published in the summer. 

In its July ‘Zero emission vehicles‘ report, the committee said there should be a mandate in place before 2035 to boost both the manufacturing and sales of new electric vehicles, requiring those who sell the fewest battery models to buy credits from those who produce the most.

These credits could then be used to cut the purchase price of a new electric car.

And the brands that fail to meet the required percentage of EV sales per year could face financial penalties. 

MPs on the committee said that ‘shifting the subsidy from the taxpayer to the manufacturer will incentivise those who deliver the fewest electric vehicles in our showrooms to up their game’.  

Responding to the ZEV mandate announcement, Mike Hawes, SMMT chief executive, said: ‘The automotive industry is putting zero-emission vehicles on Britain’s roads at pace beyond all forecasts, such is the choice and appeal of these new models.

‘A well-designed, flexible regulatory framework could help maintain or even increase this pace to ensure we deliver on our shared decarbonisation ambitions.’  

Paul Willcox, managing director at Vauxhall, said a ZEV mandate can work in the UK, though only if there are ‘complimentary targets on the other key parts of the electric vehicle ecosystem which are key to driving Britain to a more sustainable transport infrastructure’. 

He added: ‘With our Ellesmere Port plant set to become the first electric vehicle only factory within the Stellantis group, we look forward to working with the Government on the detail of how a ZEV mandate can be implemented and help support a sustainable vehicle marketplace in the UK.’

Commenting on the effectiveness of ZEV mandates, Ben Nelmes, head of policy at transport research group New AutoMotive, said: ‘A California-style ZEV mandate will reduce the cost of electric cars for consumers, and provide clarity for businesses – whether they are installing charge points or making electric cars. 

‘Today’s announcement puts the UK well ahead in the global transition to electric cars. This means cheaper transport for drivers, more jobs and investment in UK car manufacturing and cleaner air for everyone. We now need to see our European neighbours following in our footsteps.’

The AA has been less supporting of a mandate to make battery cars more affordable to the masses.

It has previously said that a better way to make EVs more attainable for consumers is to make them VAT exempt.

‘Rather than focusing on tying manufacturers up in red tape to meet EV sales targets, we need to improve the incentives offered to consumers to buy electric vehicles,’ Jack Cousens, the motoring group’s head of roads policy, said in July.

‘Scrapping VAT would be the most influential policy to help spark the electric revolution.’ 

Edmund King, AA president, today added that the ZAV mandate is ‘probably unnecessary’, explaining: ‘Manufacturers are already taking big steps in order to meet the 2030 ban on new petrol and diesel cars and vans, but bringing in this ‘red tape’ exercise could harm car production plans already in place.’

Yet he did show support for the extra £620million made available for ‘targeted’ plug-in vehicle grants and EV infrastructure, with the latter focussing on residential charging for those without off-street parking. 

‘This new charge point funding targeted more at the eight million households without dedicated off-street parking is a welcome step which will give power to electric drivers,’ he said.

‘With the cost of petrol and diesel rising, the desire to switch to electric is stronger than ever before. Should the Chancellor go a step further next week and scrap VAT on targeted new EV sales, he would deliver a truly electrifying Budget that could ‘Get Electric Done’.’   

Jim Holder, editorial director at What Car?, also said that most car makers are already well positioned to cope with a ZEV mandate: ‘The requirement to sell a proportion of clean vehicles each year from 2024 is unlikely to be a concern for most manufacturers who are already gearing towards a ban on the sale of petrol and diesel cars by 2030. 

‘While some makers are ahead of others, most new car manufacturers are already offering at least one form of electrified vehicle in their line-up,’ he said. 

It was revealed last week that plans to introduce road pricing as part of the Net Zero Strategy had been shelved amid fears the idea could kill off demand for electric vehicles. 

The Treasury has been examining proposals for the introduction of road pricing to replace the £30billion in lost fuel duty that will result from a move to electric vehicles. But Whitehall sources told the Daily Mail that the idea has been dropped.

‘Road pricing is not happening,’ said one source. ‘There is an issue around revenues that will have to be addressed in the future. But there are no active discussions around it at the moment.’

Officials fear charging drivers by the mile would act as a major disincentive to people considering buying an electric vehicle.

The Prime Minister is also said to be concerned the Government would face a public backlash if it introduced road charging.