The ZEV mandate and impact on ICE sales

One of the most interesting takeaways from the recent Financial Times Future of the Car Summit held in London, has to be the comments from Martin Sander , General Manager of Ford's European electric car division, with regards to the impact of the UK’s Zero Emission Vehicle (ZEV) mandate.

Under the ZEV mandate, all volume car manufacturers must ensure that no less than 22% of all their car registrations must be zero emission in 2024. In essence, this means battery electric vehicles (BEVs). Failure to achieve this will result in an eye-watering ￡15,000 fine per car. In the years ahead, that percentage of zero-emission registrations increases each subsequent year, rising to 80% by 2030 and 100% by 2035.

There are also lower targets for light commercial vehicles (LCVs). Only 10% of new vans sold must be zero-emission this year, rising to 70% by 2030 and 100% by 2035. In year one, fines for missing the 10% target are set at ￡10000 per vehicle, but in future years, this times to ￡18000 per vehicle.

These are challenging targets; at the end of April, BEV cars' market share stood at 16.9%, and BEV LCVs' market share stood at 4.9%. For some manufacturers, achieving the required targets this year will represent a huge challenge. It was this issue that Martin Sander addressed head-on at the summit by suggesting that Ford might limit the availability of petrol/diesel cars in the UK, or increase prices to stifle demand, stating;

“We can’t push EVs into the market against demand. We’re not going to pay penalties. We are not going to sell EVs at huge losses just to buy compliance. The only alternative is to take our shipments of [petrol/diesel] vehicles to the UK down and sell these vehicles somewhere else.” He added: “I don’t know if consumers in the UK would like seeing [engine vehicle] prices going up.”?

At the same event, Peugeot chief executive Linda Jackson said the company had “no choice” but to meet its plan to sell only electric vehicles in Europe by 2030.

“As a manufacturer, we have to meet it,” she told the summit. “There is no way that we will pay penalties, not from an ethical point of view nor from a business point of view.”

At the same event, the one crumb of comfort for under-pressure manufacturers came from UK transport decarbonisation minister Anthony Browne again. He said he did not expect carmakers to end up paying fines for missing the targets.

What is evident is that pressure is mounting on both the government and manufacturers to align on measures to help make the switch to BEVs more accessible. Only last week, Peugeot joined a growing band of carmakers calling for more government assistance in helping new car customers make the switch to electric.

Peugeot’s UK boss Adam Wood says he’d like to see more ‘measures’ to make the switch ‘easier’, which include tax incentives for private buyers and VAT equalisation between home and public charging.

It will be fascinating to see how things develop over the coming months, but what is already clear is that BEVs are becoming more accessible and affordable, with lower prices, special offers, and low-rate finance, are just some of the support measures that are in place. Will more follow?