Zero Emission Vehicle Mandate

Lindsay Hoyle Excerpts

Monday 7th April 2025 Commons Chamber

[The Secretary of State for Transport (Heidi Alexander)]

With permission, I shall make a statement about the zero emission vehicle mandate. Today, this Government are giving British car makers certainty and support on the transition to electric vehicles, as we set out plans to back industry in the face of global economic headwinds. We have worked in close partnership and at pace with colleagues in the Scottish Government, the Welsh Government and the Northern Ireland Executive, whom I would like to thank.

The automotive industry is a cornerstone of our economy. It supports over 150,000 jobs and generates £19 billion every year. Today, with Government backing, it must negotiate the turbulence of fresh global economic challenges. For too long, the sector has been held back by a lack of long-term certainty. That changes now. This Government listen and act. We have listened to car manufacturers, large and small, from Sunderland to Solihull, and from Crewe to Coventry. Car makers have told us what they need to not just survive, but thrive. What they want is what we are delivering: practical, sensible reforms that will unlock investment, protect jobs and strengthen Britain’s leadership in the zero emissions transition.

Today, I can confirm that the Government are maintaining our manifesto commitment to phasing out the sale of new petrol and diesel cars by 2030. I can also reconfirm our commitment to all new cars and vans being 100% zero emission from 2035; there are no changes to the trajectory of the transition set out in the ZEV mandate regulations. We support the role of hybrid vehicles as a crucial stepping-stone in that journey; new full hybrids and plug-in hybrids will be on sale until 2035. That strikes the right balance. We are being firm on our climate commitments, but flexible on how we meet them, because our aim is not to impose change for its own sake, but to enable industry to make the transition in a way that matches supply with demand, and to support businesses, and the jobs that they provide, every step of the way.

We are significantly increasing the flexibility within the ZEV mandate. Manufacturers will have more freedom on how they meet targets, including the ability to sell more EVs towards the end of this decade, when demand is projected to be higher. We are also extending the ability to borrow and repay credits through to 2030, and the ability to earn credits for cleaning up non-ZEV fleets all the way out to 2029, so that companies can manage their pathways more effectively. This recognises the real-world challenges that British businesses face, and gives them the smoothest possible road to run on.

We are also reducing fines for missing ZEV targets from £15,000 to £12,000 per vehicle. Where fines are levied—for the vast majority of manufacturers, they will not be—the revenue will be recycled directly back into support for the sector, because this Government invest in solutions and do not punish ambition. Let me be clear: this is not a retreat from our ambitions on EVs—quite the opposite. It is right that the threat of fines remains, as it is an inescapable fact that the domestic transport sector remains the UK’s single largest carbon emitter, accounting for 30% of emissions in 2024. That is why we are doubling down on our commitment to the electric transition. There is more than £2.3 billion available to support industry and consumers. That includes funding for new battery factories, EV supply chains and charging infrastructure, and grants for zero emission vehicles.

The public are already leading the way. March saw a 43% increase in electric vehicle sales, compared to the same month last year. February was a record month too, with EVs accounting for one in four new car sales. That surge in demand shows that we are moving in the right direction, but it also shows the importance of maintaining momentum, so we will continue working with industry to ensure demand keeps pace with supply, building a sustainable market for the long term.

The infrastructure is growing, too. There are over 75,000 public charge points now available, and more than £6 billion of private investment is lined up for UK charge point roll-out by 2030. Today, a new charge point is installed every 29 minutes. That is more than 50 every day. Families charging at home can now save up to £1,000 a year, compared with petrol drivers. An EV charged at home overnight can run for as little as 2p a mile. That is putting money in people’s pockets while relieving pressure on the planet.

We know that one size does not fit all, which is why small and micro-manufacturers will be exempt from the new measures. It is why vans will have five extra years to go green, because we recognise their unique role in the economy and in giving businesses the time that they need to adapt. It is why we are making space for hybrid vehicles in the mix, not as a compromise, but as a contribution. Hybrids offer lower emissions today without requiring overnight shifts in driving behaviour or infrastructure. They build public confidence, support choice and ensure that no one is left behind in the transition.

This is not just a transport, environmental or economic policy; it is part of this Government’s plan for change. It is a long-term effort to deliver clean, sustainable and high-quality growth, creating new jobs in battery production, EV supply chains and infrastructure, anchoring manufacturing here in the UK and supporting skilled apprenticeships in clean tech and advanced engineering. With today’s announcement, British names such as Rolls-Royce, Land Rover and Vauxhall will have the certainty they need to plan, invest and lead. We are backing British businesses to succeed at home and abroad. These reforms are fair to manufacturers, reasonable for workers and right for the climate challenge ahead.

I know some people might retreat to tired arguments about a war on motorists, but this Government are focused on real challenges, not imaginary grievances. Most of us are motorists or passengers; we are all in this together. What we need is not division, but direction, and that is what we are delivering today by listening to industry, following the data and building a strategy grounded in evidence and ambition.

When we came into government, we promised to prioritise one thing above all else: growth—for industry; for clean transport; and for people, places and pay packets. With these bold, practical reforms, backed by the Prime Minister’s plan for change, that is exactly what we are delivering. I commend this statement to the House.

[Mr Speaker]

I think, on his birthday, we should hear from the shadow Secretary of State.

[Gareth Bacon (Orpington) (Con)]

Thank you very much, Mr Speaker. I will not embarrass myself by announcing how old I am, but it is far too old.

[Mr Speaker]

We have just checked.

[Gareth Bacon]

I thank the Secretary of State—[Interruption.] That was a very helpful intervention by the hon. Gentleman; he is completely right. I thank the Secretary of State for her statement, and for advance sight of it. The announcement by the United States of America that 25% tariffs will be imposed on UK automotive exports has understandably caused significant concern in the automotive sector. Automotive manufacturers now face tariffs of 25% on around £8 billion-worth of car and auto parts exports—a potentially devastating blow for the automotive industry. I assure the Secretary of State that we will support the Government when they do sensible things to reverse the impact on our already fragile economy. In that vein, I am glad that the Government have recommitted to negotiating a better deal with our closest ally and largest single-country trading partner, and I sincerely hope that they are successful in their negotiations.

However, on the substance of the right hon. Lady’s statement, I cannot share her enthusiasm for the rest of Labour’s plans. The reality is that today, Labour is simply trying to clear up the uncertainty that it has contributed to. When the previous Conservative Government reacted to sluggish automotive trade figures by making the pragmatic decision to delay the ban on new diesel and petrol cars from 2030 to 2035, aligning the UK with major global economies such as France, Germany, Sweden and Canada, Labour accused us of undermining the automotive industry. This morning, the Secretary of State criticised the previous Government for chopping and changing, and a consultation put out by Labour claimed that our policies caused “great harm” to the UK’s reputation as a leading nation in the EV transition by moving the goalposts. However, that is precisely what Labour did upon taking office by ideologically reversing the 2035 deadline. The plans announced over the weekend do not place the automotive sector in a better position than it was when we left office, despite some minor adjustments to the zero emission vehicle mandate.

What is more, this announcement will not undo the damage that this Labour Government have already caused. Their introduction of a £25 billion national insurance jobs tax in their first Budget was a major blow to businesses; we have warned for months that this tax will harm industries, and the automotive sector is no exception. The Secretary of State will know that US tariffs on UK car exports are set to cost the automotive sector £1.9 billion. Combined with the Government’s jobs tax—which is predicted by the Office for Budget Responsibility to put 50,000 jobs at risk, and is likely to cost the automotive sector an additional £200 million—that double whammy is going to be very difficult for the sector to absorb.

Indeed, despite today’s announcements, the Society of Motor Manufacturers and Traders has stated that zero emission vehicle mandate targets remain “incredibly challenging”. In its words:

“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…to give motorists full confidence to switch”,

but that is not what the Government are offering. Instead of the “bold changes” that the Prime Minister boasted of at the weekend, what we have is mere tinkering at the edges. Allowing producers of luxury vehicles, such as Aston Martin and McLaren, to be exempt from the 2030 ban on the sale on new internal combustion engine vehicles is welcome, as is the news that all forms of hybrid cars will be available until 2035. However, this does not go anything like far enough. The Government are still proposing to increase the level of tax liability on the value of hybrid company cars by as much as 16%, which could potentially cost individual drivers thousands of pounds each. The reduction in fines for missing EV sales targets from £15,000 to £12,000 per vehicle is nothing to be celebrated—it is like drowning at the depth of 100 metres instead of 120 metres.

Over the past few months, we have heard from numerous businesses that they simply cannot cope with the ZEV mandate. In October, the chief executive officer of Jaguar Land Rover warned that the mandate was causing severe disruption to the new car market. Not long after, Vauxhall announced the closure of its Luton factory, citing the ZEV mandate as a key factor in making that plant economically unviable. More recently, uncertainty has surrounded Plant Oxford, the home of the Mini since 1959. Last year, excluding fleet sales, the fact is that only 10% of private purchases of new vehicles were electric. Far from doing retailers a favour, the Government’s offer to fine them a small amount less for failing to sell a product that consumers demonstrably do not want is a kick in the teeth to the automotive industry.

I must therefore ask the Secretary of State the following questions. With just one in 10 private buyers purchasing an electric vehicle in 2024, why are the Government still trying to force people to buy something for which there is limited consumer demand at present? Is she really pretending that any of the measures announced today were not already in train before the tariffs were announced? Will she commit to reversing the hike in the hybrid company car tax? Does she really think that reducing the fine for each car that fails to comply with EV quotas will be enough to mitigate the impact of tariffs? Does she not believe that, rather than chasing an arbitrary timeline, now is the time for a more gradual transition to electric vehicles, one that would allow the sector to mitigate many of the challenges it is currently facing? Finally, does she recognise that the combined impact of the ZEV mandate, the jobs tax and external tariffs is a perfect storm for the automotive sector, which is facing significant and exacerbated challenges because of the choices her party has made over the past nine months?