EV gross sales fall in need of authorities targets for 2024 – will producers now be fined?

Electric car sales in 2024 were below the threshold required by binding government targets, registration figures confirm today.

Despite EVs sales reaching record levels in December, the total market for the calendar year was short of the Government’s Zero Emission Vehicle (ZEV) mandate requirements.

A total 19.6 per cent of all new cars sold in Britain last year were electric – some 2.4 percentage points short of the ZEV target, according to official data from the Society of Motor Manufacturers and Traders.

This is despite manufactures ‘pulling every lever to try and achieve this target‘, including discounting new EV models, withholding petrol car stock, dealers putting on extra demonstrators and pre-registered more battery-powered vehicles towards the year end.

The report comes as transport ministers launched a consultation on phasing out the sale of new petrol and diesel cars from 2030, including the potential introduction of ZEV mandate flexibilities to help makers scale up sales without facing huge financial penalties between now and the end of the decade.

The Government has threatened manufacturers’ that failed to meet the 22 per cent EV-sale requirement for 2024 with hefty fines of up to £15,000 per car short of the quota. 

So, will makers that fell short last year be forced to pay up?

December car sales statistics showed a strong end of year surge for EVs with 43,656 registrations of new battery electric vehicles (BEVs), accounting for 31 per cent of the market that month.

Despite this being the highest BEV market share since December 2022’s record of 32.9 per cent, the market as a whole still failed to meet the ZEV mandate’s 22 per cent quota for 2024.

One of the biggest reasons sales fell below the target is a lack of private demand continued to dwindle – a pattern that’s become consistent across new cars of all fuel types since the pandemic.

Instead, fleets and businesses propped up the EV market last year, driven by favourable tax allowances aimed at making electric cars more compelling to company car drivers. 

As such, only one in 10 private buyers chose to purchase a new electric car in 2024, the SMMT’s figures show.

Instead, petrol remained by far the most popular powertrain for private buyers, taking a massive 61 per cent of the market.

This is despite car makers’ discounting EVs last year to the tune of £4.5billion in an effort to kickstart demand –  an amount the trade body has said is ‘unsustainable’ in the long term.

This is also despite drivers having a far greater choice of new battery cars, with a record 132 ZEV models now available in the UK – up 38 per cent since 2023. 

In fact, new EVs now account for a third of all models in showrooms and manufacturers begin to phase out combustion engine cars.

While BEV registrations don’t paint a positive picture for car makers trying to avoid fines and hit Government targets, BEV registrations figures for December hold up well against other powertrains.

Across the total market, pure petrol and diesel car registrations fell by 4.4 per cent and 13.6 per cent respectively as more buyers swapped either to BEVs, or to lower emission hybrid electric vehicles (up 9.6 per cent) and plug-in hybrids (up 18.3 per cent).

The final month of the year showed a 0.2 per cent decline in new car registrations overall with 140,786 units netted. 

But the new car market was up 2.6 per cent year on year, with 1.953 million new registrations reached.

Nick Williams, transport managing director at Lloyds Banking Group, said: ‘Manufacturers have seen significant growth in electric vehicle sales over the course of 2024, with recovery from supply chain disruptions and more competitive pricing helping to boost purchases. 

‘While challenges persist, there is a quiet confidence that 2025 will see the sector successfully continue to help the country in its transition to a more sustainable future.’

Will car makers be fined for missing 2024 ZEV targets? 

Although manufacturers have fallen short of the total 22 per cent ZEV target, the Department for Transport (DfT) has said that it doesn’t expect any manufacturer to pay fines.

The DfT commented: ‘Thanks to the flexibilities in the ZEV mandate, we’re confident the whole market has complied with the 22 per cent target and that no car manufacturer will need to pay fines.’

The nuances of the mandate mean that manufacturers also have a CO2 target as well as a target on the number of vehicles sold which is based on their emissions in 2021.

If a manufacturer beats their CO2 target (i.e. has lower emissions than in 2021) they can convert the amount they beat it the CO2 target by towards ZEV compliance. 

Preliminary data from the DfT suggests that when this is taken into account, the car market as a whole will have achieved the 22 per cent ZEV Mandate target.

While manufacturers may have avoided fines this year, the SMMT warns that the ‘record year for EV registrations’ has come at a ‘huge cost’ and that the ‘billions invested’ in ‘generous incentives’ are ‘unsustainable’.

Mike Hawes, SMMT chief executive, said: ‘We need rapid results from the regulatory review and urgent substantive support for consumers – else automotive investments will be at risk and the jobs, economic growth and net zero ambitions we all share in jeopardy.’

Government launches consultation into 2030 ban on new petrol and diesel cars 

The Government says that a consultation, commencing from Monday, ‘marks a new phase of collaboration between the government and the automotive and charging sectors’ towards ending sales of new combustion cars at the end of the decade.

Announced by the Secretary for Transport Heidi Alexander, it provides an ‘opportunity to consider stakeholders’ preferences on technology choices and the types of vehicles permitted between 2030 and 2035 alongside ZEVs’.

It comes after Labour confirmed that some new hybrid vehicles will be given a five-year stay of execution until 2035, though has yet to outline if this will include both conventional and plug-in hybrid models.

Ministers confirmed they are ‘committed to maintaining’ the ‘trajectories’ of the ZEV mandate, which likely means the annually-increase ZEV thresholds will not be reduced.

However, the Government is open to considering ‘how the current arrangements and flexibilities are working and what steps can be taken to support domestic manufacturing and cement the UK’s position as one of the major European markets for ZEVs.’

Pinpointing charging infrastructure as crucial to the transition to EVs and helping increase uptake, the transport secretary announced a package of measures she hopes ‘will make charging infrastructure quicker and easier to install’.

Alexander said: ‘This includes simplifying planning rules, publishing our review to speed up grid connections, and continuing to provide resource funding for local councils up and down the country.’

These will build on the £2.3billion of government support to UK manufacturers and consumers to transition to zero emission vehicles and £6bn of private investments.