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The Government’s recently announced changes to the Zero Emission Vehicle (ZEV) mandate, risk setting the car industry up for failure and undermining the underlying purpose of the policy.
This is the first of several briefings from Transport & Environment UK analysing the impact of this decision and the consequences this will have on industry, consumers and the economy.
While the headline targets of reaching 80% ZEV sales by 2030, and 100% by 2035, remain unchanged in the latest proposals, the government is now allowing several flexibilities which will significantly slow down the transition and set carmakers up for failure by 2030.
Government backtrack:
Despite this, the government has now introduced multiple flexibilities that loosen the rules for manufacturers going forward and allow for far greater sales of internal combustion engine (ICE) hybrid and plug-in hybrid (PHEV) vehicles over the coming years at the expense of zero emission cars.
These flexibilities risk a severe compliance cliff edge by the end of the decade - setting manufacturers up for failure by risking irresponsible use of flexibilities and disrupting what should be a stable transition.
How to safeguard the mandate:
If the government insists on moving forward with increased flexibilities, there are two essential revisions that would limit the scope of these flexibilities and reduce the risk of a cliff edge scenario:
➢ Limit borrowing to 2028, requiring payback across 2029 and 2030 to prevent a cliff edge in 2030
➢ Cap the ability to transfer credits from CO2 savings to 45% in 2025, 25% in 2026, 15% in 2027, 10% in 2028 and 5% in 2029 continuing on the cap reduction trajectory currently set in regulation.
