The Society of Motor Manufacturers and Traders (SMMT) has called for the next Prime Minister to weaken the ZEV Mandate in its latest report.
SMMT’s latest ‘State of the Automotive Nation’ report, alongside its second UK Automotive Business Leaders Barometer, argues vehicle manufacturing can return to growth if the UK Government “moves quickly to remove the barriers holding it back”.
It claims the “most immediate concern” is the ZEV Mandate with “regulation running ahead of natural market demand”. As a result, it states that manufacturers are subsidising the market at “unsustainable levels, undermining residual values and weakening the UK as both a market and a manufacturing base”.
The report highlighted annual targets for the ZEV Mandate rise to 38% of BEV sales for cars and 34% for vans next year, although current registrations are 23.9% for cars and 9.5% for vans. It added car makers have spent more than £12 billion on discounts to stimulate demand. But the required figures and discounting numbers have been disputed by Transport & Environment.
At the same time, the SMMT welcomed the £4bn of DRIVE35 funding, international trade deals, EV grants and regulation to support self-driving vehicles, and action on electricity costs. It also highlighted the risks from the ‘Made in Europe’ proposals from the EU, which automotive leaders in the UK said would hit their proposals if they go ahead unchanged.
In addition, the SMMT referenced the risk from January 2027, when tougher rules of origin under the EU-UK Trade and Cooperation Agreement will trigger a 10% tariff on some 70% of battery electric and plug-in hybrid models traded across the Channel.
Without a joint solution, the sector faces a tariff bill of around £1.4 billion in 2027, it said, putting £16.4 billion of UK-EU battery electric and plug-in hybrid vehicle trade at risk.
Responding the the fresh calls to weaken the Mandate, Tanya Sinclair, CEO of Electric Vehicles UK (EVUK), said:
“The UK car manufacturing industry faces real challenges, particularly on trade, tariffs and competitiveness. But weakening the ZEV Mandate won’t solve them.
“Manufacturers are complying with the mandate, and those that need flexibility already have it through the concessions government has introduced. The mandate is increasing consumer choice, bringing prices down and giving global manufacturers confidence to invest in the UK.
“If government wants to strengthen UK automotive, it should stop creating policy uncertainty and start backing the businesses investing in the transition. Certainty drives investment. Constant change holds it back.”
Delvin Lane, CEO of InstaVolt, added:
“Drivers are increasingly choosing electric because the economics stack up, the charging experience is improving and there are more great vehicles to choose from than ever before.
“The industry should recognise that shift in consumer demand and seize the opportunity it presents. The UK has become one of Europe’s strongest EV markets, supported by billions of pounds of private investment in charging infrastructure.
“The focus now should be on accelerating that momentum, not resisting it. Give consumers confidence, give businesses certainty and the investment will continue to follow.”
Mike Hawes, SMMT Chief Executive, said:
“UK Automotive can drive growth, innovation and net zero, but only if the right decisions are taken now. The Industrial Strategy sets out a plan, but delivery is now what matters. We need open trade with Europe, competitive conditions at home, and a realistic route to grow zero emission vehicle uptake.
“Reforming the ZEV Mandate is not about weakening ambition; it is about making the transition achievable, protecting investment and ensuring the UK remains a place where automotive businesses can build, sell, export and grow. The window for action is closing, which means we cannot wait for lengthy discussions.”
Image courtesy of Green Car Guide
