Weakening the Zero Emissions Vehicle (ZEV) Mandate could cost the UK economy at least £2.9bn, according to analysis by the UK trade association BEAMA.
The analysis compares the current ZEV mandate, which targets that 80% of UK vehicle sales will be electric vehicles in 2030, with the government’s proposed weakened mandate, which drops the target to 50%. Both scenarios factor a gradual increase in the proportion of ZEV sales through to 2034.
Under the best-case scenario, every foregone EV sale is assumed to be replaced by a hybrid vehicle sale. Even then, Treasury VAT revenues would still be almost £2.9bn lower over the period because hybrid vehicles generate less VAT per sale than EVs.
BEAMA also modelled the impact of lower EV sales before accounting for any replacement hybrid vehicle purchases. On that basis, the reduction in EV sales under a weakened ZEV Mandate could reduce VAT revenues generated from EV sales by up to £16.7bn between 2030 and 2034.
Beyond the impact on VAT revenues, weakening the ZEV Mandate carries wider economic implications. Manufacturers, charging infrastructure providers and supply chain businesses have invested in the UK on the basis of a clear and consistent policy framework supporting the transition to vehicle electrification.
BEAMA is calling on Government to maintain the existing clear and stable trajectory for the ZEV Mandate and avoid policy changes that could undermine business confidence in the UK’s decarbonisation of the transport sector.
Matt Adams, Head of Electrical Transport Systems at BEAMA said:
“You don’t attract investment by moving the goalposts. Businesses have invested in the UK because Government set a clear direction of travel towards electrification. Weakening the ZEV Mandate risks sending the opposite message at exactly the moment Britain should be giving organisations confidence to invest.
“Taken alongside proposals such as eVED, which could cost the economy over £4 billion in its first year, there is a growing risk that businesses receive mixed messages about the pace and direction of the UK’s EV transition. Businesses could be forgiven for wondering whether the UK is still fully committed to the transition it has asked industry to invest behind.”
Richard Earl, Vice President of the Board of Directors and R&D Director at EO Charging said:
“The UK has clear, legally binding net-zero and carbon-budget commitments. Accelerating the electrification of transport is central to meeting these commitments. The ZEV Mandate provides the policy certainty needed to support that transition. Weakening the Mandate now, without presenting a credible alternative pathway, risks undermining both the UK’s decarbonisation commitments and the investment confidence that industry has built around them. It would also risk diluting the UK’s leadership position in electrification and redirecting critically needed investment overseas.”
Jayson Dong – Senior Manager, External Affairs Europe at ABB E-mobility said:
“In an increasingly uncertain economic and political environment, policy stability has become a competitive advantage. The ZEV Mandate provides a clear and predictable framework that enables manufacturers, charging infrastructure providers and investors to plan with confidence, while creating the market conditions in the UK needed to drive innovation, competition, and technological advancement across the transport sector. Any weakening of that certainty slowing down the mobility transition and risks delaying investment decisions at a time when the UK should be reinforcing confidence and fostering growth.”
Image courtesy of the Green Car Guide
