UK downshifts its EV policy in the face of industry losses, claiming measures 'could force brands to withdraw from the UK market'

The British government's plans to push zero emission vehicles (ZEV) are hurting the industry. This was admitted by Enterprise Secretary Jonathan Reynolds, who this week said he was "profoundly concerned" about the harmful effects of the plan to eliminate the production of new gasoline and diesel vehicles.

Rather than a hard stop to zero, Reynolds promised a shift of gears. He announced he would open consultations to design "a better way forward" to arrive at the same goal.

The Conservatives are not satisfied either. In a heated exchange in parliament on Wednesday, Prime Minister Keir Starmer and the opposition's Kemi Badenoch blamed each other for the failures of green policies: "Does the prime minister stand by his promise to ban the sale of petrol cars by 2030 even if more jobs will be lost?" asked Badenoch, to which Starmer responded by reminding him that the mandates "were actually introduced by the last government [which was Conservative]."

The mandate sets a percentage of zero-emission vehicles that manufacturers must sell. Those who do not comply must pay a penalty. The percentage scales year by year, this year being 22% of total sales and reaching 80% by 2030. The current government, however, had pledged to push up the total ban on gasoline cars from 2035 to 2030.

The numbers and the industry are crying for help

The debate was stoked after Stellantis announced that one of its subsidiaries, Vauxhall, would close a van factory, putting 1,100 jobs at risk. Although it announced plans to open another factory, it maintained that the closure had occurred "within the context of the U.K.’s ZEV Mandate," which it called "stringent."

The announcement came days after Ford reported that it will cut 800 jobs over the next three years to reduce production of electric cars in the United Kingdom alone, and it will eliminate 4,000 in Europe. In announcing the cuts, the automaker argued that it had suffered "significant losses in recent years," noting: "The industry shift to electrified vehicles and new competition has been highly disruptive."

Ford and other major industry players speak of a mismatch between state-mandated obligations and consumer demand. According to U.K. media outlet The Telegraph, so far this year, only 18% of new cars sold have been electric. Many manufacturers, moreover, have fallen below the production target.

The Society of Motor Manufacturers and Traders (SMMT) made a similar warning Thursday: "Weak demand for EVs and the need to fulfil ever-rising sales quotas will cost the industry some £6 billion [$7.6 billion] in 2024, and even more next year – with the potential for devastating impacts on business viability and jobs."

To make up for the lack of demand and try to meet the government-imposed target, companies have subsidized buyers of their own electric vehicles to the tune of about 4 billion pounds (roughly $5.1 billion), increasing their losses. The total "compliance bill", the trade association claims, scales to "almost £6 billion in 2024 alone."

The SMMT did not oppose the goal of increasing E.V. production, but did warn that "losses of this scale could force brands to withdraw from the U.K. market."