Car makers name for pressing overview of EV gross sales targets as demand wanes – however ministers say trade is complying

Car makers have issued an urgent plea to the Government to follow the lead of the EU and US by relaxing electric vehicle sales targets amid stalling demand.

The Society of Motor Manufacturers and Traders (SMMT) on Thursday published new analysis it said shows the stringent Zero Emission Vehicle (ZEV) mandate ‘no longer stands against geopolitical and economic reality’.

Instead, it dubbed the policy a ‘straitjacket’ that is putting ‘huge pressure’ on the automotive sector.

However, ministers pointed to figures released the same day that suggests industry has been complying with the scheme introduced two years ago.

Citing 2024 cars sales against the ZEV mandate, decarbonisation minister Keir Mather, said the numbers showed ‘the transition to electric is on track’. 

Yet the SMMT warned that manufacturers are ‘already falling short’ of the binding targets, with EVs only accounting for 23.4 per cent of new car registrations last year – well below the 28 per cent ZEV threshold.

The ZEV mandate requires car manufacturers to sell an increasing share of EVs over the next decade. 

It was introduced in 2024 with mainstream brands with meeting a target of 22 per cent of all registrations being zero-emission cars, else face hefty fines of £12,000 per vehicle below the requirement.

Last year, the target was upped to 28 per cent, with the DfT’s provisional data suggesting the wider sector was on course to meet the objectives.

However, it did introduce ‘flexibilities’ within the mandate to support car makers.

These include additional credits for manufacturers that increase their hybrid vehicle sales and for those who reduce CO2 emissions across their entire model ranges each calendar year.

Car firms not meeting the targets are also able to purchase ZEV credits from manufacturers who are exceeding them, such as EV-only brands like Polestar and Tesla. 

For 2026, the threshold of EV sales mix rises to a third of all registrations but – most concerningly for the SMMT – then accelerates dramatically in two years’ time.

From 2028, the target is 52 per cent, then 80 per cent by 2030 before eventually reaching full ZEV sales by 2035.

Speaking to journalists on Thursday morning during the SMMT Electrified event, chief executive Mike Hawes advised that ‘decarbonisation could mean deindustrialisation’ and that he ‘doesn’t know anyone who thinks the industry will get to 80 per cent by 2030’. 

He said that while the sector is ‘fully committed to net zero’, changing conditions must be taken into account. 

‘Non-compliance with the mandate is not an option but compliance comes at a tremendous cost – either incentives, fines, or in trading credits. 

‘So, compliance doesn’t necessarily mean the mandate is delivering,’ he warned.

However, the Department for Transport (DfT) countered by suggesting provisional data for 2025 shows manufacturers are on track to meet ZEV targets. 

In the last two years alone, the SMMT estimates that manufacturers have spent more than £10billion discounting EVs in a bid to boost sales.

With this level of discounting described as ‘unsustainable’, the trade body is growing increasingly concerned that the expectation for more than half of all sales to be electric by 2028 is not an achievable yardstick given the lack of demand.

Martin Sander, board member for German car-maker Volkswagen, said there is ‘a limit to how much we as a car industry are willing and capable to incentivise electric vehicles’.

He went on: ‘The UK is a very important and big market for us but of course we have to find business viability.’

Managing director of Volvo UK Nicole Melillo Shaw added that the cost of developing EVs combined with ‘hyper competition’ in the market means manufacturers are ‘spending more just to stand still’. 

The assumptions behind the regulation, when it was conceived, are causing the issues, Hawes says. This is because the EV industry is not where it was expected to be when the plans for the mandate were being drawn up.

The SMMT points to batteries currently costing more than 30 per cent more than expected, energy costs being 80 per cent more than expected, EVs still having a price premium of around 17 per cent, and public charging costing 120 per cent more than anticipated. This considers rises in inflation, but it demonstrates a clear disconnect.

Hawes commented: ‘The UK’s EV transition pathway was conceived with the best of intentions – but the assumptions behind it have proved over-ambitious. 

‘A landscape which once looked solid has turned out to be quicksand. Recognising the world of 2026 is not the one envisaged five years ago is not a retreat from ambition; it is a necessary step to achieving it.’

But ministers appear unlikely to soften the ZEV mandate for, despite other major markets – namely the EU and US – both scaling back their own electric car sales targets in recent months.

The DfT said government is ‘backing industry and drivers to make the switch’ thanks to the availability of the Electric Car Grant (ECG) – offering up to £3,750 off the price of some new EVs up until 2030 – and ‘major investment to expand the UK’s charging network’.

Mather said: We’re investing over £7.5billion to support manufacturing, rollout chargers across the UK, and back British industry by boosting sales through our ECG, helping over 75,000 drivers buy a new EV and save up to £3,750.’

He said the government would wait – as planned – until early next year to review the mandate and its targets. 

Senior figures from within the UK’s electric vehicle sector also urged ministers to stick by its existing ZEV ambitions, warning that weakening policy would ‘risk slowing progress just as the shift to electric gathers pace’.

Fiona Howarth, founder and director of Octopus Electric Vehicles, said: ‘The ZEV mandate provides the certainty that brings more choice and better value to drivers.

‘Weakening this policy now would be the wrong approach. We should be doubling down on ways to power our cars and homes with energy produced here in the UK, rather than relying on imported fossil fuels. 

‘The focus now should be on building confidence and accelerating the transition, not slowing it down.’

Similarly, Tanya Sinclair, CEO, Electric Vehicles UK, said: ‘If some manufacturers now want to weaken the targets designed to bring these vehicles to market, they are only hurting themselves. 

‘Drivers are increasingly choosing electric because the technology, performance and running costs are better.’