Editor's letter: ZEV mandate creates more losers than winners
Government should focus on stimulating demand for EV rather than penalising car makers for a lack thereof
Is this the week the mask slipped off the UK’s zero emission vehicle (ZEV) mandate?
Explosive comments from the CEO of Vertu Motors, one Britain’s biggest car dealer groups, referenced the ZEV mandate as having created a “state-imposed supply chain”.
Robert Forrester said that car makers were holding back the supply of ICE cars until 2025 while trying to push buyers into electric cars.
The latest What Car? Target Price data has revealed that the average discount on a new EV is almost 10%, with the biggest discounters being Mazda (25% on average), Jeep (21%) and Audi (15%).
Yet even with hefty discounts, private buyers are shunning EVs,
"It’s almost as if we can’t supply the cars that people want but we’ve got plenty of the cars that maybe they don’t want,” said Forrester.
Car makers are increasingly peeved about the ZEV mandate and are being increasingly vocal about it, questioning the gap between public demand and legislated targets for EVs.
If the demand isn’t there, it’s the car makers who are on the hook, facing fines for any shortfall in sales.
Stellantis CEO Carlos Tavares, whose brands continue to launch EVs apace and at increasingly lower costs, has placed his UK factories under review as “we cannot be making these [vans] in the UK and being the victims of the ZEV mandate; this is a contradiction that the company cannot accept”.
It’s a struggle to see who is winning in all this. As Forrester pointed out, it's bad for business, because discounting erodes profitability to the point where car makers are losing money on EVs. And by constraining the new car market, the government is losing out on VAT receipts and putting manufacturing facilities like Stellantis’s at risk.
EV sales rose in August, but August is always an unusual month for car sales ahead of the September numberplate change, and the Society of Motor Manufacturers and Traders has now downgraded its forecast for EV sales in 2024 to below the crucial 22% mark.
This will only get worse next year, when the 22% target leaps to 28%. There’s nothing to suggest, nor is there a way to see, how things will get any better before then.
As it stands, the legislation can't be reviewed until the end of 2026, at which point fines would need to be paid by any non-compliant car maker, as missed targets in one year can be carried over to the next for up to three years, albeit with interest.
This all creates a pessimistic tone in the discussion about EVs.
When the market gets talked down, so the cars get talked down with them, yet the reality is that EVs are getting ever better and ever cheaper and will work for a lot more people than the demand suggests.
The government should focus on stimulating that demand rather than penalising car makers for it not being there.