Mandate review must bring meaningful change, not marginal adjustment
Government’s consultation, published today, on potential changes to the ZEV Mandate is welcome and much needed. A review had been factored into the regulation from its outset, but bringing it forward has become increasingly important given the challenges manufacturers face with every passing month. It matters, therefore, not just because the mandate influences the competitiveness of one of the country’s most important sectors, but because it will help determine the success of Britain’s EV transition. Getting both right is imperative.
Policy must now respond to the evidence – and it shows overwhelmingly that the optimistic assumptions underpinning the mandate’s current trajectory have not materialised. Industrial energy costs remain uncompetitive, public charging is still too expensive and inconsistent, while raw material and battery costs remain too high. EV demand has accelerated, which is a cause for celebration, but only with billions of pounds of manufacturer and government discounts. This is unsustainable – causing significant harm to the sector and, perversely, actually threatens the success of the transition and overall global carbon reduction. This is why every manufacturer, locally manufacturing or importing, in credit or not, believes the UK will not meet its 2030 target.
The consequences are severe: lost profitability, damaged competitiveness, undermined residual values, and, in the longer term, narrower model choice and reduced investment in domestic manufacturing. This is not the way to deliver a sustainable transition. The consultation, therefore, is the opportunity for government to take stock and optimise the transition to work for all.
Reform of the mandate must be meaningful, delivering material changes rather than marginal adjustments that kick the can down the road. Industry’s commitment to zero emission mobility remains unwavering, but change must give automotive businesses the conditions they need – to invest, protect skilled jobs across the country, strengthen Britain’s manufacturing base, and deliver the net zero transition in a way that is sustainable and permanent.
Certainty is even more important for government’s ambition for vehicle manufacturing growth and supply chain scale-up through its Modern Industrial Strategy and DRIVE35 programme. The latest announcement of nearly £130m in matched government-industry investment to support cutting-edge ZEV technology and jobs is welcome and reflects UK Automotive’s strategic importance. But investment support and market regulation must pull in the same direction. DRIVE35 can help companies innovate, commercialise and scale here at home, but its impact will be blunted if the domestic market is made uncompetitive by regulation that runs ahead of demand.
Many more investment decisions are due, which is why the consultation must be completed urgently, giving manufacturers clarity for 2027 and beyond and avoiding further damage to profitability, competitiveness and the UK’s attractiveness as an investment destination. With the review underway, government has a chance to put the UK’s automotive transition on a more realistic and competitive footing, and industry will work with policymakers to deliver that outcome to secure jobs and growth nationwide.