Industry will deliver but mandates don’t make markets
With less than 100 days to go, manufacturers finally have clarity on what they are required to sell next year and up to 2030, with government yesterday setting out the percentages of new zero emission vehicles that manufacturers will be required to sell. The industry is investing billions in decarbonisation and recognises the importance of this mechanism as the single most important measure to deliver net zero. Delivering the mandate, however, is not without challenge for the industry – despite the flexibilities now included to support pragmatic, equitable delivery given the diversity of our sector.
It’s also worth repeating that, despite the pushback of the end of sale date for conventional petrol and diesel engine vehicles from 2030 to 2035, the UK still has the most ambitious transition timeline of any major European market – but without any private customer incentives. Elsewhere in Europe, where markets equally have a 2035 end of sale date but no mandate, incentives are pulling buyers in through scrappage schemes, fiscal grants, favourable motoring taxes and exemption from luxury car taxes. We see the boost that tax incentives for company car buyers and fleets have given to uptake in the UK – now we need to deliver for private consumers if we are to encourage them to make the switch.
Furthermore, the lack of a post-2030 regulatory framework creates investment uncertainty. Manufacturers are offering an ever-growing range of zero emission vehicles, but demand must also match supply. We need a buoyant market that delivers fleet renewal at scale, ensures a vibrant used EV market and gives consumers confidence. This means an attractive package of fiscal and other incentives, mandated infrastructure targets and a consistent message that encourages drivers to go electric now.
Driving new sales is essential if production, especially here in the UK, of the latest, greenest models, is to keep pace. New SMMT automotive production figures out this week show that we continue to turn out significant numbers of these vehicles, as electrified cars represented nearly two in five of all cars produced in August, a 14th consecutive monthly gain and evidence of the UK’s capability to be a global leader in zero emission vehicle production.
Commercial vehicle manufacturing meanwhile continued to grow, and at scale, recording its most productive August since 2012 and pushing year-to-date volumes significantly above pre-pandemic levels. This growth is set to be increasingly electrified too, with an all-new production plant now on stream to help deliver the next generation of essential vehicles to UK roads and beyond.
While it’s long awaited and helpful to have finally a measure of market certainty, at least for the next six years, if production volumes – –and indeed the entire market – are to fully recover, we must also have certainty on our future trading relations with our biggest import and export market – the EU. This has become acute as both sides of the channel need a delay to the introduction of tougher rules of origin that would damage the competitiveness of electric vehicles in both the European and British markets. These rules are due to kick in on 1 January 2024, so we urge all sides to agree on a common sense solution urgently.
