Britain gears up to relax EV sales rules

Ministers are preparing to relax rules on the UK’s electric vehicle market in response to claims that government sales quotas have pushed carmakers to crisis point.
Louise Haigh, the transport secretary, and Jonathan Reynolds, the business secretary, will hold talks with industry chiefs on Wednesday as a decision looms on the future of Vauxhall’s factories in Luton and Ellesmere Port, which together employ 2,500 people.
As of this year, carmakers must ensure that 22 per cent of car sales and 10 per cent of van sales in the UK are EVs, or incur a £15,000 penalty for each vehicle outside the target. It is understood that the rules on these quotas may be adjusted to relieve the pressure on the industry.
• Electric car prices slashed by a third to meet net-zero sales targets
Haigh and Reynolds are expected to say that “all options” are on the table to help British carmakers, including the return of EV purchase subsidies for private owners, which were withdrawn in 2022. Generous grants are still in place for fleet vehicles, but carmakers have been calling for subsidies for private use.
The quotas are set under the so-called zero-emission vehicle (Zev) mandate, and will rise to 28 per cent and 16 per cent in only six weeks. They will then rise annually to reach 80 per cent for cars by 2030. This assumes that the previous government’s ban on the sale of new petrol and diesel cars will come into force in 2035, though Labour has pledged to bring it forward to 2030.
Stellantis, the owner of Vauxhall, Peugeot and Citroën, has started a review of the future of its works in Ellesmere Port, Cheshire, and Luton in Bedfordshire, and a decision is expected soon. Carlos Tavares, its chief executive, has said that the thresholds for EV sales are approximately twice the “natural” demand.
Nissan is expected to tell Haigh and Reynolds that the EV mandate is endangering jobs at its sprawling works in Sunderland.
Sharon Graham, general secretary of Unite, the Labour Party’s biggest union backer, suggested this weekend that momentum was building in Whitehall towards plans to reform the Zev mandate and make it more appealing for carmakers such as Stellantis to keep building vehicles in the UK.
“Unite is already having constructive discussions with government and industry to reform the Zev mandate to protect jobs,” Graham said.
Government sources played down the prospect of an imminent decision on reforming the UK’s electric vehicle sales regime, and stressed that carmakers would be expected to comply with the Zev mandate this year. But they indicated that reform was on its way. “The UK has become a hard place for manufacturers to do business,” one said. “This is the beginning of a consultation to explore what we can do.”
Changing the mandate is likely to prove difficult in the short term because it will require the blessing of parliament. However, adjustments are being explored, including allowing manufacturers to put British-made cars sold abroad towards their EV sales targets. Officials may also equalise the percentage differential between cars and vans so that van makers such as Vauxhall can benefit.
Another idea believed to be under consideration is giving credit towards sales targets if manufacturers can demonstrate that they have reduced carbon emissions in their factories, as is understood to have been tabled by Jaguar Land Rover.
Government sources refused to rule out a potential return of EV purchase grants for private owners, saying that “all options” would be considered. This could meet resistance from the Treasury, however, given chancellor Rachel Reeves’s gloomy assessment of the public finances.
Reform of the EV sales regime comes as Unite heaps pressure on Stellantis to commit to the future of its factories. The company is expected to conclude a “strategic review” of its UK manufacturing sites later this month and the union is calling on Stellantis to end the uncertainty this has caused for hundreds of workers.
Graham said: “It’s time for Stellantis to commit to the future of both the Luton and Ellesmere Port plants, and end the climate of fear and rumour they have created through this strategic review.
“If [Stellantis] threatens either plant, then it will be met with the collective strength of Unite’s members, who will have my full, unequivocal backing and the whole weight of the union behind them. The transition to electrification will not be achieved by threatening workers.”
The company said: “Stellantis is the only light commercial vehicle manufacturer in the UK. To remain efficient, we are strategically reviewing our operations working with our union partners.”
A government spokesman said: “The UK automotive industry is one of our great success stories, employing over 150,000 people, and that’s why ensuring the continued success of the industry is a priority for this government.
“We know this is a concerning time for Stellantis employees and their families. That’s why the business and transport secretaries have met the Stellantis CEO several times over the last few months and we’re also engaging with trade unions and local partners on the future of their UK operations.”