With harsh tariffs suddenly coming our way from across the pond, our car industry faces uncertain times. The Government has responded by saying that it will weaken the UK’s EV sales targets, a puzzling move that threatens to do more harm than good, both on growth and the cost-of-living.
The reality is that Trump’s tariffs have very little to do with the ‘Zero Emission Vehicle’ mandate. These tariffs hit the cars our manufacturers export to the US, while the mandate is about the number of EVs that manufacturers sell in the UK. And since the UK imports next to no EVs from the States, there’s little logic in thinking that weakening these targets will help manufacturers deal with the problems they face.
Let’s be clear, the mandate is working. It stimulates competition between manufacturers as they seek to hit their EV sales targets. This sends EV prices down, and sales up – enabling the UK to leap ahead of France and Germany to become Europe’s largest EV market. Weaken the mandate, and you weaken this competition.
Prices could start to rise, and EV sales could slow. This in-turn would slow the growth of the second-hand EV market, where 80% of us buy our cars. Millions of British families could end up stuck driving dirtier and more expensive petrol cars for longer – not much help in the midst of a cost-of-living crisis.
Weakening the mandate also jeopardises economic growth. Investors are ready to pump billions of pounds into the UK’s charging infrastructure and, by extension, its economy. But to do that they need to be confident about how many EVs will be on the UK’s roads in the future. Play around with these EV targets and confidence evaporates, and that investment risks drying up.
And with the world moving inexorably towards EVs, our car industry’s survival rests on successfully making the shift to building the vehicles that our export markets increasingly demand. Go slow, and stick with building petrol and diesel cars, and in a few years’ time we’ll find that the market for these cars has disappeared – a recipe for factory closures and job losses. Last time we didn’t keep up with technological change, our car industry turned to rust and we almost lost it all.
Providing a stable and ambitious regulatory environment is one of the key things that the Government can do to help our car industry make this shift. Repeating the flip-flopping we saw from the previous government on petrol car phase out dates, and playing around with a regulation that has only been in place for 16 months, is the opposite of stable, and does no good for our car industry’s prospects of survival and prosperity.
Colin Walker is Head of Transport at the Energy and Climate Intelligence Unit