The Labour government’s ambitious plan to phase out the sale of new petrol and diesel vehicles by 2030 has hit a roadblock, with carmakers claiming that the targets are unachievable. The industry argues that the lack of charging infrastructure and the difficulty of home charging for many consumers make the transition to electric vehicles (EVs) a daunting challenge.
Liam Butterworth, chief executive of Dowlais, a major supplier of automotive components, predicts that global new car production will struggle to reach 50 percent electric by 2045. His assessment goes beyond what other industry leaders have publicly admitted, but it resonates with those who criticize the government’s confusing rules, which they say force carmakers to build more EVs than the public is willing to buy.
Under the current policy, carmakers must pay a £15,000 fine for each non-EV sold if they fail to meet the annual targets, which ramp up from 2024. This creates a paradox where manufacturers must increase EV sales while demand is falling, leaving them unable to lower prices to attract customers. The situation is further complicated by the fact that the UK’s targets are more stringent than those of the EU, which allows hybrids to be included in the compliance calculations and is considering extending its deadline.
Carmakers like Stellantis are engaging in discussions with the Labour government to find a compromise, with some even threatening to halt UK production if a solution cannot be reached. As the £15,000 fines under the Zero Emission Vehicle (ZEV) Mandate loom, the industry is grappling with the challenge of meeting the 22 percent EV sales target by the end of December. Currently, only 16 to 19 percent of new vehicles are EVs, with some brands lagging far behind.
The stuttering sales of electric vehicles have led some carmakers to reconsider their EV investment strategies. Stellantis is adapting its Fiat 500e platform to accommodate hybrid engines, while Jaguar Land Rover is ensuring its new platforms are engine-agnostic. Mercedes-Benz is redirecting funds to upgrade its combustion-engine S-Class, and Ineos Automotive has pulled the launch of its Fusilier electric SUV due to classification issues.
Consumers’ concerns about the higher costs, lower resale values, and the difficulty of charging EVs are significant factors in the slow adoption of electric vehicles. The removal of government subsidies, such as the plug-in car grant, has further dampened demand. The industry is calling for a more gradual transition, with new technologies like plug-in hybrid electric vehicles (PHEVs) playing a role.
However, the government’s strong green agenda, championed by Energy Secretary Ed Miliband, may make it difficult for carmakers to find a receptive audience for their proposals. As the 2030 deadline approaches, the Labour government and the automotive industry must work together to find a realistic and achievable path towards the widespread adoption of electric vehicles in the UK.
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