End of the road for cheap electric cars in the UK
Carmakers have funded at least £10 billion in electric car discounts over the last two years, but this cannot continue for much longer. This is the view of Mike Hawes, Chairman of the Society of Motor Manufacturers and Traders (SMMT) who was commenting on the UK’s latest vehicle production figures on Friday (30 October).
“That level of support is unsustainable. It erodes profitability, depresses residual values for consumers, and diverts resources from the products and production capacity needed to decarbonise,” he said.
The discounts cover the first two years of the Zero Emission Vehicle (ZEV) Mandate. The ZEV Mandate requires carmakers to make zero-emission vehicles a growing share of their new car sales each year.
The target stands at 33% in 2026 and rises to 80% by 2030. Carmakers that fall short of their targets face fines of £12,000 for each car over their limit.
Many brands have cut electric car prices to hit the targets because natural demand lags behind what the rules require.
Hawes noted that this week’s Budget affirmed the ZEV Mandate review will conclude this year, with changes effective from the start of 2027.
“Government must meet that deadline with meaningful reform that closes the widening gap between natural demand and regulatory targets. Marginal adjustments will not be sufficient, particularly when other policies pull in the opposite direction,” he said.
“The EV-specific tax, eVED, confirmed in this week’s Budget to commence in 2028, and Wednesday’s decision to clarify the law applying higher VAT on public compared to domestic charging, risk discouraging the very drivers the transition needs to persuade.”
Hawes noted that indusry has already show int is committed, investing billions in UK factories, supply chains and new models, with around 180 battery electric models available and more coming – whatever the review decides.
“Reforming the Mandate is not a retreat from electrification. If automotive is to participate in UK reindustrialisation, policy must make Britain competitive, help consumers switch and enable manufacturers to invest, rather than spend ever more bridging the gap between regulation and demand,” he said.
