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The UK government looks set to reject pleas from electric carmakers to spare them from paying fines until 2026 if they fail to meet targets and deadlines to sell EVs to the British market.
The industry has warned of an “irreversible impact” on UK car production and investments, with vehicle manufacturers already being forced to cut jobs to address slowing sales and the costly EV transition.
On Wednesday, transport secretary Louise Haigh and Jonathan Reynolds, business and trade secretary, held a two-hour meeting with charging companies and eight EV manufacturers including Volkswagen, Nissan, and Tesla to discuss the government’s electrification policy.
Ministers are resisting industry pressure to weaken the current trajectory of the so-called electric vehicles mandate under which a certain proportion of new cars sold in the UK have to be EVs, with that percentage climbing every year until 2035, by which point all sales will have to be electric.
The government is also holding its ground on fines of £15,000 per car if companies fail to hit the targets.
Asked if the government could meet a request from some of the companies for a delay to the introduction of these penalties until the end of 2025 to help them ease into the system, one official said: “That is not going to happen.”
Haigh said at the weekend that the government was in “listening mode” and open to ideas to help the industry.
Ministers have not ruled out lowering the fines but would prefer alternative mechanisms to avoid the cumbersome process of revisiting primary legislation.
These could involve new “flexibilities” such as making it easier for companies to reach the EV mandate by letting them count British-made cars sold abroad in their sales targets. Another possibility is to equalise the proportion of cars and vans included in the targets.
EVs made up 18 per cent of new car sales in the UK in the first 10 months of this year, below the 22 per cent required for 2024. The target for next year is set to be 28 per cent.
The sale of new diesel and petrol cars will be banned from 2030, although a small and diminishing number of hybrid sales will be permitted until 2035.
The concerns expressed by the carmakers came as the government on Thursday announced that planned fines for makers of boilers who failed to hit targets for sales of fuel-efficient heat pumps to homes would be eased from £3,000 to £500 a unit.
Following the car industry meeting, a government spokesman said: “Recognising the global challenges the industry has been facing, ministers underlined the government’s commitment to working constructively and in close partnership with the sector.”
At the meeting, Nissan, which employs over 7,000 people in the UK mostly at its Sunderland plant, urged the government to consider a two-year “monitoring period for 2024 and 2025” during which the carmakers would not be penalised for missing the targets.
“The mandate risks undermining the business case for manufacturing cars in the UK,” Guillaume Cartier, Nissan’s chair for the Africa, Middle East, India, Europe and Oceania region, said in a statement after the meeting.
“We now need to see urgent action from the government by the end of the year to avoid a potentially irreversible impact on the UK automotive sector,” he added.
Reynolds, who grew up in Sunderland, is understood to be pushing hard for tweaks to the EV mandate to help the industry.
Ahead of the meeting, Ford said it planned to cut 800 jobs in the UK as part of a broader restructuring in Europe, citing “unprecedented” regulatory and economic headwinds. The cuts would affect administrative roles in the country but not its two UK manufacturing sites, Dagenham and Halewood.
When asked whether the UK’s EV targets had affected its decision, Peter Godsell, Ford’s head of human resources in Europe, described the rules as “challenging” and the environment as “very unstable”.
“We need greater flexibility to be able to hit the targets while demand remains low at this point,” he added.
Vauxhall owner Stellantis, who were also in the talks, has previously said it could stop production in the UK unless the government changed its current electrification policy.
“These are not false threats,” another participant in the meeting said, adding that the car manufacturers had asked the government to clarify its direction by Christmas.
However, charging manufacturers who were also speaking to ministers warned about the dangers to their investments should the government make changes to EV rules.
Ian Johnston, chief executive of Osprey Charging, said that confidence in the number of EVs hitting British roads was “key” for attracting investors. “This must not be undermined,” he added.
Johnston’s comments were echoed by Vicky Read, CEO of industry body ChargeUK: “Everyone agrees that uncertainty is the enemy of the EV transition and threatens investment on all sides.”
Additional reporting by Rachel Millard