Electric car sales targets could be eased as demand flags

Rules on electric vehicle (EV) sales could change as part of a “fast track” consultation from the government, the BBC understands.

Carmakers with factories in the UK have been urging the government to alter the rules, which they say set sales targets too high, because EV demand is not strong enough.

Business Secretary Jonathan Reynolds is expected to announce the consultation at the Society of Motor Manufacturers and Traders’ annual dinner later on Tuesday.

Under the current mandate, a percentage of the cars that firms sell must qualify as zero-emission.

EVs must make up 22% of a firm’s car sales and 10% of their van sales this year. For every car sale that pushes it outside of that mandate, they must pay a £15,000 fine.

There are flexibilities in the system, allowing manufacturers who can’t meet the targets to buy “credits” from those that can.

In practice, this means buying credits from companies such as Tesla or Chinese firm BYD, which build electric models exclusively.

Manufacturers argue that demand for electric cars has not been as high as was expected when the rules were drawn up.

As a result, to avoid fines, they say they are having to discount new vehicles heavily, or subsidise rivals that build electric cars only, none of whom have a manufacturing base in the UK.

Sales of electric cars have been increasing. In October, they made up nearly one out of every four cars registered. However, industry sources insist this is largely down to unsustainable discounting.

Reynolds will seek to address these concerns with his announcement later on Tuesday, as first reported by Politico.

At a meeting last week with Reynolds and Transport Secretary Louise Haigh, car firms called for more flexibility to be built into the regulations.

Nissan, which builds EVs at its plant in Sunderland, has said the rules are “undermining the business case for manufacturing cars in the UK, and the viability of thousands of jobs and billions of pounds in investment”.

Last week, its rival Ford announced it will cut 800 jobs in the UK over the next three years. It said this was partly because of weaker demand for EVs.

The BBC understands that, while the government remains committed to meeting Labour’s manifesto target of ending sales of new petrol and diesel cars by 2030, it is willing to consider changes to the mandate.

A number of options have been suggested, including adding flexibility by allowing sales credits to be transferred between cars and vans, giving credit for British-made EVs sold abroad, or new incentives to encourage private buyers to choose EVs.

In its manifesto, Labour insisted it would bring forward the target date for ending sales of new petrol and diesel cars to 2030. It is understood that target is still seen as non-negotiable, and the annual quotas will not be changed.

While the government is willing to alter the mandate in other ways, it wants the industry to reach broad agreement on what those changes should be.

Haigh said earlier this month that the government will look at “flexibilities” but insisted that “the mandate will not be weakened”.