All carmakers in UK to escape fines for missing electric car sales targets in 2024

No carmaker in the UK will have to pay fines for missing electric car sales targets in 2024, according to analysis.

All but one carmaker sold enough cars, or will be able to use so-called flexibilities, to avoid steep fines under the zero-emissions vehicle (ZEV) mandate, according to estimates by T&E, a campaign group that focuses on transport and environment issues. One carmaker, Japan’s Suzuki, will have to buy credits from rivals to avoid fines.

But intense industry lobbying, based on fears that ZEV sales will fail to pick up significantly next year, is expected to persuade ministers to relax the scheme and help most manufacturers to avoid fines in 2026 also.

Brands including the top-selling Volkswagen, Ford, Toyota and Britain’s biggest carmaker, JLR, which runs Jaguar and Land Rover, are among those who will have to use additional loopholes to avoid fines, according to T&E’s analysis.

Carmakers must sell an increasing number of electric cars every year under the UK’s ZEV mandate, which was brought in by the previous Conservative government to push the industry to reduce planet-heating carbon emissions.

If manufacturers miss targets they face steep fines of up to £15,000 for every car above their quota of fossil fuel cars. The industry has mounted a strident campaign to persuade the Labour government to relax the rules as demand for electric cars hit a plateau – as well as a parallel effort in the EU.

In 2024, carmakers were given a headline target of 22% of sales being fully electric, rising to 28% this year and 80% in 2030. The actual level of battery sales achieved last year was a record 19.6%. However, the rules also contain major loopholes – described as “flexibilities” – that allow carmakers to earn credits by reducing the emissions of the fossil fuel cars they sell, as well as “borrowing” credits from future years.

T&E’s analysis, based on detailed sales figures from Dataforce, suggested that the actual target equated to about 18%. The campaign group said the lack of expected fines showed the UK government should not relax the rules.

Anna Krajinska, the director of T&E UK, said: “Surging EV sales in 2024 prove the mandate is working – carmakers are hitting targets. Now the government must maintain ZEV mandate ambition to continue to drive down costs for consumers, and focus on delivering a robust industrial strategy for the sector to support UK automotive manufacturing.”

The analysis suggested that BMW, Mercedes-Benz, and Volvo’s Chinese owner Geely were able to meet the 2024 mandate through battery car sales alone, as did electric-only brands Tesla and BYD. Those companies will be able to sell credits to the highest bidder.

However, the industry argues that it still needs help because demand for electric cars is not high enough. Carmakers say they have been forced into “unsustainable” discounts to attract enough buyers.

Mike Hawes, the chief executive of the Society of Motor Manufacturers and Traders, a lobby group, said it was not yet possible to calculate compliance because the government had not officially confirmed 2021 data, while borrowing [from expected future sales] would be risky if sales did not increase.

“Manufacturers are having to make up the shortfall between the ambitions of the ZEV mandate and market realities, a gap which has already cost the industry around £4.5bn in discounts alone,” Hawes said. “This is a huge cost which cannot be sustained indefinitely but, with the mandate compelling EV market growth of around 50% this year, the costs look likely to increase even further, threatening jobs, market growth and business viability.”

Government sources have said they expect to make changes to the flexibilities, while keeping the headline targets the same. However, the precise shape of the changes will depend in part on officials’ assessments of the carmakers’ competing requests.

Suzuki sold no electric cars in 2024, but will launch the electric eVitara this year, and a spokesperson acknowledged it would look at all options to avoid fines, including trading with other carmakers. A Volkswagen spokesperson said it was too early to say what flexibilities it would have to use.

A Ford spokesperson said the company would use the flexibilities and confirmed that “we do not anticipate the need to pay penalties”.

However, the company added: “In current market conditions the cost of compliance under the scheme is unsustainable. Consumer incentives are crucial to boost demand – especially in the van market, where uptake lags behind passenger vehicles.”