The UK introduced a flexible quota system to encourage carmakers to increase adoption of electric vehicles as the government seeks to phase out sales of combustion-engine cars by a delayed target of 2035.
(Bloomberg) — The UK introduced a flexible quota system to encourage carmakers to increase adoption of electric vehicles as the government seeks to phase out sales of combustion-engine cars by a delayed target of 2035.
The new guidelines, which come on the heels of Prime Minister Rishi Sunak rolling back some of the UK’s green policies last week, will mean that from 2024, 22% of new cars sold should be zero-emission vehicles. That rises to 80% in 2030, with sales of any new petrol and diesel cars ending five years later.
Carmakers will be able to avoid penalties of up to £15,000 ($18,300) per vehicle thanks to a trading system, allowing them to make up for slow sales of electric vehicles early on by selling more in future years. Manufacturers who sell more EVs than the target will be able to trade credits with those who undershoot.
“Our mandate provides certainty for manufacturers, benefits drivers by providing more options, and helps grow the economy by creating skilled jobs,” Transport Secretary Mark Harper said in a statement.
The targets for electric vans have been tweaked after talks with manufacturers. The government watered down a previously proposed 2025 sales target to 16% electric from 19%. In turn, the threshold for the following year was raised to 24% from the earlier proposed 22%. Potential penalties for vans have been reduced to £9,000 in 2024 only, and double that thereafter.
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Sunak this month pushed back a planned ban on the sales of new petrol and diesel cars from 2030 to 2035, claiming it would help Britons struggling to pay their bills during the cost-of-living crisis. He insisted in a subsequent speech that he was still committed to reaching net zero goals for the economy by 2050 and said he was not watering down targets. But he said the UK must act in a “more proportionate way.”
Critics of the delay have said it would make the shift harder, putting motorists off switching to EVs. There have been signs of softening in the market in recent weeks.
Last month, car dealer Vertu Motors Plc warned that supply of electric vehicles was outstripping demand from consumers. The company, which owns the Bristol Street Motors dealership, said carmakers were reacting by cutting prices to stimulate sales.
“Delivering the mandate will challenge the industry, despite the flexibilities now included to support pragmatic, equitable delivery given this diverse sector,” said Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders.
(Updates with detail on van targets in fifth paragraph)
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