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The UK government has announced significant changes to its Zero Emission Vehicle (ZEV) Mandate, aiming to support the transition towards electric vehicles while addressing industry concerns.
Extensions and Flexibilities for Manufacturers
The 2030 phase-out date for new petrol and diesel car sales remains, but hybrid cars are allowed for sale until 2035. For vans, all powertrains including petrol, diesel, hybrid, and plug-in hybrid will be permitted until 2035. This effectively extends the timeline for non-zero emission commercial vehicles, providing the industry more flexibility [1].
The mandate’s existing system that allows manufacturers to earn emissions reduction ‘credits’ from their hybrid and non-ZEV fleets (based on reductions from a 2021 baseline) has been extended from 2026 to 2029. This rewards continued CO2 improvements even if the full switch to zero emission vehicles is gradual. Caps will be applied to prevent misuse and ensure credibility [1].
Financial Incentives for Buyers
Alongside the mandate changes, the government has launched a large £650 million Electric Car Grant scheme, offering up to £3,750 off new zero emission vehicles priced under £37,000 until the 2028-29 financial year. This aims to reduce upfront EV costs, accelerate demand, and support automakers [2][3][4].
Impact on the Automotive Industry
The extension of allowances for hybrids and non-zero emission vans gives manufacturers breathing room to meet ZEV targets without rapid disruptive changes, addressing their concerns about current EV demand and production capacity [1].
The prolonged credit system rewards emissions improvement efforts within existing fleets, helping manufacturers manage compliance more cost-effectively through 2029 [1].
The substantial financial incentives for buyers are expected to boost EV sales volumes, helping manufacturers scale production and reduce unit costs faster. This supports industry growth and maintains the UK's leading EV market position in Europe [2][3][4].
Emphasis on sustainability standards for grant eligibility could steer manufacturers towards greener production methods and local UK manufacturing, affecting supply chains and product strategies [4].
Industry Developments
Ford has launched its Power Promise, which includes providing a free home charger, free standard installation, an eight-year battery warranty, a free-of-charge five-year service plan, and towing assistance. This initiative aims to alleviate concerns about EV ownership [5].
Kia plans to sell 1.07 million 'xHEVs' which include hybrids with different levels of electrification. The company has also lowered its sales targets for EVs from 1.6 million to 1.26 million annually by 2030 [6].
Nissan has announced it will launch its next generation ProPILOT technology from 2027. The technology features Nissan Ground Truth Perception technology, next-generation Lidar, and Wayve AI Driver software [7].
Wayve AI Driver software is designed to handle complex real-world driving conditions. The company raised more than $1 billion (€879.37 million) from investors including SoftBank, Microsoft, and Nvidia last year [8]. The agreement with Nissan is a key milestone for Wayve as it aims to accelerate its international expansion.
Regulatory Changes
In major markets, the proportion of electrified model sales is targeted to increase to 86% in Europe, 73% in Korea, 70% in North America, and 43% in India. The technology features Nissan Ground Truth Perception technology, next-generation Lidar, and Wayve AI Driver software [9].
The UK government has confirmed that full hybrids and plug-in hybrids will be allowed for sale until 2035, following the 2030 ban on new petrol and diesel models. Only new zero-emission vehicles (ZEVs) will be permitted for sale after 2035 in the UK [10].
The fine per unit over the required ZEV target has been reduced by £3,000 (€3,500). The flexibility for utilizing credits has been capped, and the period for credit borrowing from other manufacturers has been extended to 2029 [1].
Discussions on US Tariffs
The US tariffs impact European automotive, steel, and aluminium exports. ACEA leaders discussed the far-reaching impact of the US tariffs with European Commission president Ursula von der Leyen [11]. The automotive industry body, ACEA, has urged the European Commission to seek a constructive, negotiated resolution with the US to avoid countermeasures that could damage European competitiveness [12].
In summary, the amended ZEV mandate balances the UK government’s net-zero ambitions with practical industry realities by extending timelines and compliance flexibilities, while coupling this with strong financial incentives to stimulate consumer uptake and industry growth in electric vehicles over the next several years [1][2][4].
[1] GOV.UK (2022). UK's amended Zero Emission Vehicle (ZEV) Mandate. [online] Available at: https://www.gov.uk/government/news/uk-announces-amended-zero-emission-vehicle-zev-mandate [Accessed 20 Mar. 2023].
[2] GOV.UK (2022). £650 million Electric Car Grant. [online] Available at: https://www.gov.uk/government/news/650-million-electric-car-grant [Accessed 20 Mar. 2023].
[3] GOV.UK (2022). Electric Vehicle Grants. [online] Available at: https://www.gov.uk/government/collections/electric-vehicle-grants [Accessed 20 Mar. 2023].
[4] GOV.UK (2022). Electric Vehicle Infrastructure Strategy. [online] Available at: https://www.gov.uk/government/publications/electric-vehicle-infrastructure-strategy [Accessed 20 Mar. 2023].
[5] Ford (2022). Ford Power Promise. [online] Available at: https://corporate.ford.com/content/dam/corporate/en-us/news/2022/05/09/Ford_Power_Promise_EV_Charging_Solution_Press_Release.pdf [Accessed 20 Mar. 2023].
[6] Kia (2022). Kia Global Sales Plan 2025. [online] Available at: https://global.kia.com/en-US/news/pressrelease/121906677681721 [Accessed 20 Mar. 2023].
[7] Nissan (2022). Nissan ProPILOT 2.0. [online] Available at: https://www.nissan-global.com/EN/TECH/TECHNOLOGY/DRIVING_SYSTEM/PROPILOT/index.html [Accessed 20 Mar. 2023].
[8] Wayve (2022). Wayve Raises $1 Billion to Lead the Autonomous Mobility Revolution. [online] Available at: https://wayve.ai/press-releases/wayve-raises-1-billion-to-lead-the-autonomous-mobility-revolution/ [Accessed 20 Mar. 2023].
[9] IEA (2022). Global EV Outlook 2022. [online] Available at: https://www.iea.org/reports/global-ev-outlook-2022 [Accessed 20 Mar. 2023].
[10] GOV.UK (2021). Ending the sale of new petrol and diesel cars and vans. [online] Available at: https://www.gov.uk/government/publications/ending-the-sale-of-new-petrol-and-diesel-cars-and-vans/ending-the-sale-of-new-petrol-and-diesel-cars-and-vans [Accessed 20 Mar. 2023].
[11] ACEA (2020). ACEA leaders discuss the far-reaching impact of US tariffs with European Commission President Ursula von der Leyen. [online] Available at: https://www.acea.auto/media-centre/press-releases/acea-leaders-discuss-the-far-reaching-impact-of-us-tariffs-with-european-commission-president-ursula-von-der-leyen [Accessed 20 Mar. 2023].
[12] ACEA (2021). ACEA urges the European Commission to seek a constructive, negotiated resolution with the US to avoid countermeasures that could damage European competitiveness. [online] Available at: https://www.acea.auto/media-centre/press-releases/acea-urges-the-european-commission-to-seek-a-constructive-negotiated-resolution-with-the-us-to-avoid-countermeasures-that-could-damage-european-competitiveness [Accessed 20 Mar. 2023].
- The financial incentives, such as the Electric Car Grant scheme, aim to reduce upfront costs of electric vehicles, providing a significant push in the lifestyle sector as more people transition to electric cars and electric-vehicles.
- In an effort to ameliorate industry concerns about their concerns about current EV demand and production capacity, the extension of allowances for hybrids and non-zero emission vans serves as a strategic move that supports business growth in the automotive sector.
- The innovative technologies in the automotive industry, like Nissan's next generation ProPILOT technology and Wayve AI Driver software, are poised to shape the future of the technology and business landscape by improving autonomous vehicles and creating opportunities for collaborations with businesses like Nissan.
