The UK automotive industry is facing a challenging time as Stellantis announces the closure of its UK plant in Luton. This decision comes in light of the UK’s Zero Emissions Vehicle (ZEV) Mandate, which has been met with criticism from UK manufacturers. The Society of Motor Manufacturers and Traders (SMMT) has called for urgent government intervention to safeguard the sector and the transition to zero-emission vehicles in Britain.
According to the SMMT’s analysis, the weak demand for electric vehicles (EVs) and the need to meet rising sales quotas will cost the industry around GBP6 billion in 2024. The mandated targets have forced manufacturers to offer substantial discounts on EVs, amounting to an estimated GBP4 billion in incentives. Despite these efforts, the industry is still falling short of the 22% EV market share required by the mandate, potentially leading to compliance costs of GBP1.8 billion for those missing their targets.
The overall ‘compliance bill’ for the industry in 2024 is projected to be nearly GBP6 billion, with even higher costs expected next year. The SMMT warns that such losses could threaten the viability of businesses and jobs in the sector, potentially leading to global manufacturers withdrawing from the UK market and questioning the country’s appeal as a manufacturing destination.
Mike Hawes, SMMT Chief Executive, emphasized the need for an urgent review of the automotive market and regulations to support the industry. While the ZEV Mandate aims to drive EV adoption and reduce emissions, the current approach may not be sustainable for manufacturers facing financial strain.
The ZEV Mandate in the UK targets specific EV share numbers and imposes fines on OEMs for non-compliance. Despite an increase in BEV car sales, the market share still falls short of the mandated targets. Manufacturers failing to meet compliance levels face penalties of GBP15,000 for every non-ZEV unit sold beyond their allowance.
The industry had anticipated higher electric car registrations in 2024, but the latest outlook shows a significant shortfall. The SMMT highlights that the market shares for electric cars and vans are below the ZEV Mandate targets, indicating a challenging road ahead for the industry.
In conclusion, the UK automotive industry is facing significant challenges due to the ZEV Mandate and the transition to electric vehicles. Urgent government intervention and a review of regulations are needed to support the industry and ensure a sustainable transition to zero-emission vehicles. Failure to address these issues could have severe consequences for businesses, jobs, and the attractiveness of the UK as a manufacturing destination.
