ZEV Mandate Series Part 3: Targets For Cars & Vans
This piece is the third in a six-part series New AutoMotive is releasing during the ongoing consultation period for the UK’s Zero Emissions (ZEV) Mandate, over April-May. This series will examine the current government proposals around the Mandate in detail, as well as putting the policy framework into its broader context. In addition to publishing this blog series and submitting a formal consultation response, New AutoMotive will be hosting a webinar event around the ZEV Mandate and the current consultation in the coming weeks. If you are interested in attending this webinar event, you can register your details here.
A central goal of the Zero Emissions Vehicle (ZEV) Mandate is to provide regulatory certainty, creating confidence in the pace of the transition allowing car manufacturers and charging infrastructure providers to plan and allocate capital accordingly. At the heart of the ZEV mandate is a set of trajectories, one for cars and one for vans. These chart the UK’s course toward the Government’s targets for phasing out petrol and diesel vehicles in 2030 and long-range hybrids in 2035. This blog post examines these trajectories, the impact they will have on the market and how quickly we will start to see more electric cars on the road.
Allowances not certification
Under the latest set of proposals, manufacturers will be given an allowance of non-ZEV sales as a proportion of their overall sales. This allowance will be based on the ZEV mandate trajectories. Within this framework, one allowance will equal one non-ZEV in the ZEV Mandate portion of the policy. Any excess allowances can then be banked for future years compliance, or traded to manufacturers who cannot meet the target. The level of allowance is governed by the ZEV trajectories set out by the government.
Car Trajectories
The targets which have been set for cars remain unchanged from the last consultation. The target for the first year of the Mandate (2024) is for ZEVs to make up 22% of the overall sales of any given manufacturer. This means that each manufacturer will need to meet this target to be in compliance - either by selling ZEVs or by using a flexibility within the scheme. In 2022 electric vehicles accounted for 16% of the overall new car market. So far in 2023, electric cars have accounted for 17% of the market. The 22% target for 2024 is an increase from the current level of EV sales, but one within reach of the market already.
Targets for manufacturers will be set annually until 2030, when the target is for ZEVs to make up 80% of the market. The Government has decided to only legislate for the targets up to 2030 with the last five years of the scheme being drawn up later in the decade. This is a positive flexibility in the scheme, accounting for the fact that a high degree of guesswork is required when examining the future market, and that this makes setting later targets difficult. The ZEV Mandate needs to be reactive to market changes, otherwise it risks being a hindrance to growth. Given this, it is important that the capacity for reactivity is an integral part of the Mandate's design from day one.
Van Trajectories
Unlike the car trajectories, which have remained the same since the last consultation, trajectory for electric van sales have been revised to reflect the changes in the market over the past year - something that New AutoMotive has been consistently calling for. The electric van market has grown rapidly, and the new targets reflect this. The electric van market accounted for 6% of overall van sales in 2022.
The 2024 target has been increased by 2 percentage points, from 8% to 10%. Although this may seem a slight alteration, the trajectory of overall growth in the market has been made much more ambitious, with the 2030 target being revised from 50% to 70%. This is a marked increase, and demonstrates that the Government has recognised that hybrids will play a reduced role in the transition. Hybrid vans make up less than 1% of total van sales in the UK market - despite a number of high profile releases last year.
The Government should increase the 2030 target to reflect the reality of the market and not artificially push developments in the hybrid market. The CCC’s balanced pathway to net zero by 2050 states that hybrids must only play a niche role in the market by 2030 - meaning the current 30% target is still too high. As with the car trajectories the legislation will not yet set the official targets for 2031 to 2035, as to account for a large degree of uncertainty in the market.
The upward change in van targets means that the UK can expect to see a faster reduction in CO2 and other harmful tailpipe emissions. New AutoMotive have analysed the potential carbon savings that this change in targets could achieve and our estimate is that it will save 19 mega tonnes of CO2 equivalent between 2024 and 2050 [1].
These changes highlight the need for targets to be under constant review by the government in order to be able to react to the changing market conditions. The ability for the ZEV Mandate to drive the transition is intrinsically linked with how ambitious these targets are, and how well they reflect the current market conditions. The market needs to be monitored closely and the targets adjusted accordingly as the market shifts.
Next steps
Although these trajectories are important, they do not tell the whole story. The ZEV Mandate will have certain inbuilt flexibilities, meaning that the trajectories will not necessarily match the actual number of ZEVs which will be on the market. These flexibilities will ultimately determine how effective this mandate will be. New AutoMotive is currently analysing the details of the government’s proposals, and preparing its formal response to the ZEV Mandate consultation. Submissions to this consultation can be made here. In addition to this blog series and a formal consultation response, New AutoMotive will be hosting a webinar event around the ZEV Mandate and the current consultation in the coming weeks. If you are interested in attending this webinar event, you can register your details at the link here, and we will reach out to you with more details as they develop.
The webinar will take place on Tuesday 16th May, from 2pm to 4pm.
[1] This figure has been calculated using the assumptions that no flexibilities are used, vans are on the road for the same length of time today, they get marginally more fuel efficient, the number of vans grows in line with historic trends and the market follows the trajectory but does not exceed it.