8:47 am, January 20, 2025
EV discounts cost carmakers a whopping £4.5bn last year as all brands avoided fines for failing to comply with ZEV mandate targets.
That is according to fresh information from the SMMT, which says that the additional costs could end up ‘threatening jobs, market growth and business viability’.
Boss Mike Hawes admitted that the EV sales targets had ‘compelled EV market growth of around 50%’ last year, but said the cost of compliance was not sustainable for the industry.
He added that manufacturers are currently ‘having to make up the shortfall between the ambitions of the ZEV mandate and market realities’, leading to hefty discounts on EVs last year.
The comments come just weeks after the government said that it was not expecting to dish out any ZEV mandate fines as a result of ‘flexibilities’ within the rules.
These include earning additional credits for reducing the emissions of ICE vehicles, as well as borrowing credits from future years.
Carmaker’s can also buy credits from rival firms to avoid fines – a step which the Guardian reports that Suzuki took, as it failed to sell a single EV last year.
Using analysis from green campaign group, T&I, the paper reports that Volkswagen, Ford, Toyota and JLR are among the brands which will have to use other flexibilities to avoid fines for failing to meet 2024’s 22% target.
German giants BMW and Mercedes-Benz were among the outfits to meet the mandate by sales alone, along with Volvo’s Chinese owner Geely. Stellantis announced earlier this month that it too had complied with the goal.
Reacting to the findings, Anna Krajinska, director of T&E UK, said: ‘Surging EV sales in 2024 prove the mandate is working – carmakers are hitting targets.
‘Now the government must maintain ZEV mandate ambition to continue to drive down costs for consumers, and focus on delivering a robust industrial strategy for the sector to support UK automotive manufacturing.’
However, speaking on behalf of the SMMT, Hawes had a slightly different view on things.
‘Manufacturers are having to make up the shortfall between the ambitions of the ZEV mandate and market realities, a gap which has already cost the industry around £4.5bn in discounts alone,’ he said.
‘This is a huge cost which cannot be sustained indefinitely but, with the mandate compelling EV market growth of around 50% this year, the costs look likely to increase even further, threatening jobs, market growth and business viability.’
Labour is currently consulting on changes to the ZEV mandate, which could include making it easier for non-compliant manufacturers to avoid fines in future.
