There are growing concerns among car manufacturers over EV sales targets, with many, including Stellantis, calling for the government to do more to boost consumer demand.
Following the Luton plant announcement and intense pressure from industry leaders, Business Secretary Jonathan Reynolds said the government would consult on changes to EV sales rules, which is officially called the zero-emission vehicles mandate, because it is not working as intended.
“I get the seriousness and the urgency of the situation,” he said, adding that the decision to close the Vauxhall van factory was a “difficult day for Luton”.
Late on Tuesday, the car industry called for urgent government intervention “to safeguard the sector and Britain’s zero emission vehicle transition”.
The Society of Motor Manufacturers and Traders (SMMT) said weak demand for EVs and the requirement to fulfill sales quotas would cost carmakers £6bn in 2024 alone, “with the potential for devastating impacts on business viability and jobs”.
It said the strong EV demand anticipated when the zero emissions mandate was designed more than two years ago had failed to materialise, with interest rates, raw material prices, and energy costs remaining high.
However, Reynolds reaffirmed that the government remained committed to meeting Labour’s manifesto target of ending sales of new petrol and diesel cars by 2030.
As part of the shift to electric, manufacturers are currently required to sell a certain percentage of cars and vans that do not emit any emissions ahead of the 2030 ban, with quotas increasing each year.
Current rules state EVs must make up 22% of a carmaker’s car sales, and 10% of van sales in 2024.
For every sale that pushes it outside the mandate, firms must pay a £15,000 fine. There are flexibilities in the system, allowing manufacturers who cannot meet the targets to buy “credits” from those that can.
But car brands with factories in the UK have been urging the government to relax the rules, arguing that EV demand is not strong enough and more incentives are required for drivers to go fully electric.