UK government relaxes ZEV Mandate

PM Starmer revises EV sales targets and allows hybrids to be sold up to 2035 to support automotive sector in face of US tariffs

The UK government is to relax mandated electric vehicle sales targets in a bid to mitigate the impacts of trade tariffs imposed by the United States of America.

Prime minister Kier Starmer has confirmed the 2030 phase out date of new petrol and diesel car sales will still apply, but that it will be possible to sell hybrid models, which combine a petrol or diesel-powered engine with an electric motor, until 2035.

A revision of the Zero Emission Vehicle (ZEV) Mandate means car manufacturers will be given more flexibility on annual targets and face lower fines.

The UK government is also pointing to the provision of £2.3bn in the Budget to support for the manufacturing of zero-emission vehicles and to roll-out better EV charging infrastructure.

The plight of the automotive sector has been in the headlines since US president Donald Trump imposed a 25% import levy on cars. The charge on car imports into the USA came into force last week and is separate to a 10% tariff on nearly all UK products announced by Trump last Wednesday.

“Global trade is being transformed so we must go further and faster in reshaping our economy and our country through our Plan for Change,” said Starmer. “I am determined to back British brilliance. Now more than ever UK businesses and working people need a government that steps up, not stands aside.

“That means action, not words. So today I am announcing bold changes to the way we support our car industry. This will help ensure home-grown firms can export British cars built by British workers around the world and the industry can look forward with confidence, as well as back with pride. And it will boost growth that puts money in working people’s pockets, the first priority of our Plan for Change.”

Currently, 28% of new cars sold in the UK this year must be electric, a target that will rise each year until 2030. Manufacturers will now be given more freedom in how they meet their yearly targets. This means if they do not sell enough EVs in one year, they can make up for it by selling more the next year, for example.

In addition, the fine of £15,000 per vehicle sold that does not meet the latest emissions standards will be cut to £12,000.

The updated ZEV Mandate will now feature flexibilities to support UK manufacturers by:

• Maintaining the existing phase-out dates and headline trajectories for cars and vans
• Extending the current ability to borrow in 2024-26, to enable repayment through to 2030
• Extending the current ability to transfer non-ZEVs to ZEVs from 2024-26, out to 2029, giving significant additional flexibility to reward CO2 savings from hybrids. Caps will be included to ensure credibility
• Introducing a new flexibility by allowing for van to car transfer (i.e. 1 car credit will be exchanged for 0.4 van credits, and 1 van credit will be exchanged for 2.0 car credits).

Small and micro-volume manufacturers such as the supercar brands McLaren and Aston are exempted from the ZEV Mandate targets.

Vans with an internal combustion engine (ICE) will also be allowed to be sold until 2035, alongside full hybrids and plug-in hybrid vans. 

The package will be backed by a new Industrial Strategy, to be published in full this summer.

Visiting Jaguar Land Rover in the West Midlands, Starmer said: “My message to you is simple: these are challenging times, but we have chosen to come here because we are going to back you to the hilt. No one wins from a trade war. But it is also a moment for urgency. 

He continued: “Nobody is pretending that tariffs are good news. You know that better than anyone.  25% tariffs on automative exports. 10% on other goods.  That is a huge challenge to our future. The global economic consequences could be profound. But this moment has also made something very clear.  That this is not a passing phase. And just as we’ve seen with our national security and defence, particularly in relation to the war in Ukraine, now with our commerce and trade. This is a changing and completely new world. 

Starmer said that British car companies should be at the forefront of the electric revolution. “I think EV targets are a good thing. They are good for the climate. Good for business certainty and investment. Good for British manufacturing. But I accept – those targets have to work for British manufacturers. And I don’t want British firms, like this one put in a position where you have to pay a hefty fine or buy credits from foreign EV companies.

“So today – we’re going to introduce much more flexibility into EV mandates.  We’re going to help car companies based in Britain reach the targets in a way that supports growth.  We’re going to cut any fines – which I do not want or expect to see – by 20% and any money that is raised – would be invested directly back into support for the British car industry. We’re also going to take action on hybrids because these cars make a massive difference to reducing emissions.

“I mean, if you drive a Toyota Prius around town. Or, perhaps if you work here, a Range Rover you probably spend a lot of the time in electric mode. So I think for these vehicles a 2030 ban is too soon. So we’ll push that back to 2035 – for all hybrids. That’s a new step we are taking and a new announcement today.  And because we’re not ideological about how we cut carbon emissions, we’ll also make sure that cleaner, efficient, petrol cars sold before 2030 count towards your EV mandate. That will be good for British car manufacturers like this one.”

Starmer also addressed the importance of improving charging infrastructure. “That is a massive factor when people are thinking about switching and our approach means we are seeing a new public charging point popping up every half an hour. Because this is the moment when we back British business and charge up the electric revolution.”

The PM's messaging was supported by transport secretary Heidi Alexander said: “We will always back British business. In the face of global economic challenges and stifled by a lack of certainty and direction for too long, our automotive industry deserves clarity, ambition and leadership. That is exactly what we are delivering today.

“Our ambitious package of strengthening reforms will protect and create jobs - making the UK a global automotive leader in the switch to EVs – all the while meeting our core manifesto commitment to phase out petrol and diesel vehicles by 2030. 

“Once again, the prime ,inister’s decisive and bold actions show how we’re on the side of British business while harnessing the opportunities of the zero emissions transition to create jobs and drive growth, securing Britain’s future, and delivering our Plan for Change.”

A consultation on the government's EV target changes ended in mid-February, but the transport secretary told BBC Radio 4’s Today programme that the government had sped up the process of introducing them in response to the tariffs.

The government says demand for electric vehicles is rising, with recent data showing sales in March were up over 40% on last year. The UK was the largest EV market in Europe in 2024 and the third in the world with over 382,000 EVs sold, up a fifth on the previous year. There are now more than 75,000 public chargepoints in the UK.

Cabinet members endorsed the PM’s announcement. Chancellor of the Exchequer Rachel Reeves said: “The world is changing but we are determined to deliver for working people, protect their jobs and put more pounds in their pockets. That is why we are backing British business and investing in industries of the future, including our car manufacturers.”

Energy secretary Ed Miliband said “It is very important that the government has strengthened our commitment to our world leading EV transition plan. This plan will benefit UK consumers by expanding the market for cars that are cheaper to run. And it will support our domestic manufacturing so we can seize this global opportunity.”

Business secretary Jonathan Reynolds added: “This pro-business government is taking the bold action needed to give our auto sector the certainty that secures jobs, drives investment and ensures they thrive on the global stage. Our Industrial Strategy will back the country's high growth sectors, including advanced manufacturing, so we can grow the economy and deliver on the promises of our Plan for Change.”

However, the opposition parties were not convinced the measures announced by Labour were enough to offset Trump’s tariffs. The Conservatives described the measures as "half baked", while the Liberal Democrat transport spokesperson called for “better incentives” for consumers to buy electric vehicles.

Responses

Organisations representing the automotive manufacturing, car sales, motoring and charging  infrastructure welcomed the government’s announcements, but most also called for motorists to be given more real incentives to buy EVs.

Speaking for the automotive sector, the SMMT’s chief executive Mike Hawes, said: “The government has rightly listened to industry, responded quickly to global dynamics and recognised the intense pressure manufacturers are under. Industry remains committed to decarbonising road transport but the ZEV Mandate targets are incredibly challenging, especially with a paucity of consumer demand and geopolitical upheaval. Growing EV demand to the levels needed still requires equally bold fiscal incentives, however, to give motorists full confidence to switch.

“We await full details of the regulatory amendments but, given the potentially severe headwinds facing manufacturers following the introduction of US tariffs, greater action will almost certainly be needed to safeguard our industry’s competitiveness. UK-US negotiations must continue at pace, while the long-awaited industrial and trade strategies should prioritise automotive and be delivered at speed.

“In this vastly changed world, a package of measures is needed to support manufacturing, especially the supply chain, so our industry can deliver the economic growth, jobs and investment the country needs.”

Dan Caesar, chief executive of Electric Vehicles UK: “In uncertain times for the automotive industry, there are two certainties: China is set to cement itself as the biggest car exporting country in the world, and vehicles with plugs will dominate market share from 2030 onwards. While there’s some cautious reasons to be optimistic about the UK’s trajectory, and its ZEV mandate, its dilution is in stark contrast to the accelerating ambition of the Chinese and others. UK-based automakers need to fully embrace battery electric or be significantly diminished in time, running the risk of continued job losses.”

Sue Robinson, chief executive of the National Franchised Dealers Association: “NFDA has been lobbying, on behalf of its members, to have amendments made to the ZEV mandate for several years. The previous iteration of the ZEV mandate was causing significant harm to the UK automotive sector, which as the government rightly points out, employs 152,000 people and adding £19bn to the UK economy.

“We therefore welcome the changes made today as a step in the right direction for the UK automotive sector however it is vital that more incentives are available to encourage the consumer to move to EVs. The electric vehicle targets remain in place and the fines still remain too high for manufacturers. The UK remains the most aggressive regime for the EV transition and we would want the UK government to align with the rest of Europe, in order to make our market as competitive as possible in a rapidly changing global marketplace.”

Ian Plummer, commercial director of Auto Trader: “The government have gone some way to supporting the industry with the ambitious ZEV mandate targets by relaxing flexibilities and allowing hybrid sales to contribute to targets. However, the measures are still not enough.  There are more new and used EVs than ever on sale now increasing the choice and affordability of the cars, but at this critical moment for the global economy ministers should underpin consumer demand with tax breaks, such as cutting VAT on public charging.”

Edmund King, AA president: “Today’s announcements are a pragmatic step forward which we hope will help manufacturers and give confidence to drivers. The inclusion of hybrids can act as a stepping stone to help those not yet ready to make the full switch to electric.

“Our consistent message to government is more needs to be done to make EVs accessible for everyone. Generally, drivers are hesitant, but most are not hostile to the change. Help is needed to stimulate demand for EVs including broader fiscal incentives. Drivers still raise concerns about cost of purchase, cost of charging and availability of chargers. Range anxiety itself is a thing of the past as AA breakdown figures show only 1.85% of all EV breakdowns are due to running out of charge compared to approximately 1% of ICE vehicles running out of fuel.”

Warren Philips, chair of EVA England: “For drivers to consider switching to electric they need clarity and certainty and it’s encouraging to see the government confirm no new petrol or diesel cars will be sold from 2030. These targets are an essential roadmap to help drivers plan ahead. The transition will not take hold on its own however and it is disappointing no additional measures were included today for drivers who, similarly to car manufacturers, need some support to make the switch.

“We need government input to tackle high EV upfront costs in the short term and to help more households access charging affordably, especially for those who can’t easily plug in at home. Failing to tackle prevailing barriers to uptake will scupper the government’s rightly ambitious targets to move away from petrol and diesel this decade. We look forward to working with the government on its Industrial Strategy and beyond to ensure these essential measures are considered and the transition to electric is shaped with drivers’ needs in mind.”

Vicky Read chief executive of Charge UK: “It is now vital that today’s announcement is swiftly accompanied by the comprehensive package of measures to help drivers to switch that the government has promised and which will smooth the path for charging investment. Without these measures we will confine the UK to the slow lane on the transition to electric vehicles instead of going further and faster as ministers have repeatedly promised.”

Adrian Fielden-Gray, COO of national EV charging network Be.EV: “Today’s news is yet another example of there being too much 'stick' and not enough 'carrot' when it comes to EVs. The government keeps thinking about car manufacturers, but they need to instead focus on incentives for drivers making the switch to electric. Whilst there are references to £2.3bn and helping 'working people', we are crucially missing the detail of this. In practice, the EV driver keeps losing out. In the last few years, they've lost the home charging grant, they’ve lost purchasing grants, and most recently they’ve lost the exemption on vehicle excise duty. At a time where people are hesitating to switch, focus should be put on incentives and helping the making the transition to electric easier than ever.

“The government has the power to make the 2030/2035 target redundant if they shift their focus to creating more incentives to make EVs more attractive to consumers. By making EVs an obvious choice for consumers, rather than a mandated shift, the Government can increase the shift towards net zero and provide a revenue boost for British manufacturers.”

Colin Walker, head of the Transport, Energy & Climate Intelligence Unit (ECIU): “In weakening the mandate elsewhere by extending flexibilities and allowing the sale of standard hybrids between 2030 and 2035, the government risks reducing the competition it has stimulated between manufacturers, meaning prices for families seeking an EV might not fall as fast, and sales could slow. The growth of the second-hand EV market, where most of us buy our cars, would in turn be stunted – leaving millions of families stuck in petrol and hybrid cars paying a petrol premium of hundreds, and even thousands, of pounds a year.

“The question now is will this have a negative impact on growth? Could the higher driving costs associated with petrol cars stifle a growth in activity elsewhere in our economy? Will billions in investment in the UK’s charging infrastructure, and its wider economy, be held back? Since global EV sales are only going in one direction – up – any risk of the UK falling behind puts hundreds of thousands of jobs at risk.”

Energy and climate campaigners expresses concerns over what they see as a diluting of the drive to decarbonise driving.

Matthew Adams, head of transport and innovation at the Renewable Energy Association (REA): “Today’s announcements are disastrous for the environment and the charging sector. With the government saying in December that real world emissions for plug-in hybrids are 243% higher than previously estimated it is clear that a decision to allow their sale until 2035 does not benefit the environment, consumers or the air they breath.

“Meanwhile the strengthening of flexibilities mean there is now more uncertainty than ever over how many EVs will actually be sold each year. This means that we risk seeing the government make further concessions when they have to announce the fixed 2031-35 sales targets. Investors in the charging sector are watching. This is a terrible day for the environment, the charging sector and consumers.”

Dominic Phinn, head of transport at Climate Group: “The government is sticking to the 2030 phase-out for petrol and diesel cars – that’s the good news. But introducing flexibilities to legislation that is clearly doing its job confuses the market and hampers the roll-out of infrastructure. The UK’s ZEV Mandate is a global success story which turned the UK into a leader in the transition of road transport. If we want to keep it that way, the government should bring together the energy, charging, and public sector, together with the car industry, to speed up, not slow down, the UK’s charging and grid infrastructure. A competitive car industry will inevitably be driven by confident EV leaders, not by those asking for ever more flexibilities to a framework that’s designed to help them along.”