Carmakers have warned they face nearly 6 billion pounds ($7.6 billion) in compliance costs to meet the UK’s strict electric vehicle (EV) sales mandate and have urged the government to reconsider its course of action.
The country’s rules requiring that at least 22 percent of an automaker’s new car sales in 2024 be purely EVs have raised increasing concerns from the automotive industry, which is calling for urgent government intervention.
British Prime Minister Keir Starmer’s spokesperson said the Labour government will launch a consultation on changing the UK’s zero-emission vehicle mandate.
On Nov. 26, automaker Stellantis said it will plan to shut its Vauxhall van factory in southern England, putting more than 1,000 jobs at risk.
The company, which also owns the Peugeot, Citroën, Chrysler, and Fiat brands, said on Tuesday it would consolidate its UK production of light commercial vehicles at its Ellesmere Port site in northern England, where it is investing 50 million pounds ($63 million) in an all-electric vehicle hub.
It is the latest UK-based automaker to announce cuts, citing weak EV sales and compliance pressures.
Ford last week announced 800 job cuts in the UK due to “weaker demand for electric vehicles.”
Nissan also recently warned that jobs at its Sunderland plant, the largest in the UK, could be at risk due to the EV mandate.
“The mandate risks undermining the business case for manufacturing cars in the UK, and the viability of thousands of jobs and billions of pounds in investment,” Nissan said in a statement.
Under the UK’s Zero Emission Vehicle (ZEV) mandate, introduced by the previous Tory government, manufacturers face fines of 15,000 pounds ($19,000) per internal combustion engine (ICE) vehicle sold beyond the set limits.
This policy is part of the government’s commitment to phasing out internal combustion engine vehicles by 2030 and hybrid cars by 2035.
The carmaker industry said on Tuesday it will have to absorb nearly 6 billion pounds in discounts and compliance costs to meet the UK’s EV sales mandate for 2024.
The SMMT said that manufacturers will be forced to subsidize EV sales with 4 billion pounds ($6.4 billion) in discounts in 2024 but are still likely to miss the 22 percent market share target, risking 1.8 billion pounds ($2.3 billion) in compliance costs.
“With global manufacturers already making production cutbacks due to weak EV demand, losses of this scale could force brands to withdraw from the UK market and cause global investors to question the UK’s appeal as a manufacturing destination,” it said.
The industry also faces growing pressure from cheaper Chinese EVs.
Harry Wilkinson, head of policy at the Global Warming Policy Forum, told The Epoch Times by email that he believes the UK’s ZEV mandate is “uniquely punitive.”
“Job losses in the car industry are a tragedy that could have been avoided if the government had listened to concerns about this policy,” he said.
Grants Not Stimulating Demand
Andy Mayer, energy analyst at the free market think tank the Institute of Economic Affairs, said that the UK’s plug-in car grant program, which ran from 2011 to 2022, offered up to 5,000 pounds ($6,300) off the purchase price of a new EV, but despite this, the incentive had a limited impact.“The problems with it included that it didn’t work very well as a demand stimulant, a £5,000 discount isn’t much when average new car prices are £40,000 and the EV-premium over ICE is about 40–50 percent,” he told The Epoch Times by email.
He said that the program was also hard to justify.
“Taxing the general population to subsidize EV early-adopters, generally the very well off, homeowners, and those seeking an EV as a second car runabout, is deeply regressive, as well as a bung to industry who otherwise might be compelled to make cheaper vehicles more efficiently,” he said.
While the UK uses mandates with penalties, Norway’s approach is more market-driven, making ICE cars economically unviable in comparison, Mayer said.
Out of 2.8 million private cars registered in Norway, 754,303 are now all-electric, according to the Norwegian Road Federation.
Furthermore, Norway has a smaller population (5.5 million versus 68.5 million in the UK), a GDP per capita that’s 50 percent higher than in the UK, and benefits from oil wealth that help offset the costs of favorable EV tax policies.
And unlike the UK, Norway has no domestic car industry with a vested interest in the pace or direction of transition, or factories to close.
EU Fines for Missing Targets
The European Union does impose fines on car manufacturers that fail to meet their emissions targets.All new cars sold in Europe from 2035 must be zero emission at the tailpipe, but the EU says that the legislation is “technology neutral,” characterizing this as meaning there is no ban on combustion engines.
Like in the UK, Europe’s auto industry warned that a stringent push to net-zero and EV vehicles will threaten investment, jobs, and competitiveness.
“A continuous trend of shrinking market share for battery electric cars in the EU sends an extremely worrying signal to industry and policymakers,” stated the ACEA, which represents 15 major European automotive manufacturers, including BMW, Ford, Mercedes-Benz, and Volkswagen, among others.
