Rishi Sunak was attacked by the green lobby for delaying the outright ban on new petrol and diesel cars from 2030 to 2035. But has he watered down the government’s ambitions enough?
What few noticed at the time was that the government has left in place most of the targets on the way to what had been the outright ban in 2030. Under the Zero Emission Vehicle Mandate, from next year each manufacturer will have to ensure that 22 per cent of the new cars they sell are zero emission (which in practical terms means pure electric as there is a dearth of hydrogen-powered cars on the market). If they fail to do this, they will have to pay severe fines of up to £15,000 per vehicle. The target will increase to 28 per cent in 2025 and 33 per cent in 2033.
Motorists appear to be hanging onto their vehicles for longer, not least because of the rising cost of car finance
What’s the likelihood of car makers hitting these targets? Not very high, to judge by the car sales figures for October published by the Society of Motor Manufacturers and Traders (SMMT) this morning. Last month, sales of pure electric cars were up 20 per cent compared with October 2022. The trouble is, sales of petrol cars and hybrids rose sharply, too, so that the proportion of sales made up by pure electric cars has hardly shifted: only 15.6 per cent of new cars were pure electric, up modestly from 14.8 per cent in October 2022.
As for sales over the first ten months of 2023, 16.3 per cent were electric, up from 14.6 per cent over the same period in 2022. These are figures across the whole industry. Given that some manufacturers have higher electric sales than others – Tesla, of course, is 100 per cent electric – some must be falling a long way behind the 22 per cent target which will be imposed on them in just two months’ time.
Electric cars sales have stalled at around one sixth of total cars sales for a couple of years now, but so far manufacturers have not faced a penalty for that. So what happens now that they are going to be penalised?
It is hard to imagine that manufacturers will want to take the hit of hefty fines. If they cannot persuade enough of us of the merits of their electric range, the simplest answer will be for them to withdraw their petrol cars from the market. Ford has already done this by discontinuing the Fiesta, which for many years was Britain’s best-selling car. That will result in a lot less choice for motorists, and may end up with some manufacturers withdrawing from the UK market altogether.
The Zero Emission Mandate is arriving at a particularly difficult time. Some insurance companies have temporarily withdrawn from insuring electric cars owing to a lack of data on repair costs. They can be especially high in such vehicles owing to the high cost of batteries and the exposure of those batteries to physical damage in an accident. Moreover, the secondhand value of electric cars has been plummeting, which doesn’t help.
One worrying sign for the car industry is that almost all the growth in new cars sales over the past year has come from fleet buyers rather than private buyers. These sales are up 40.8 per cent over the year, while private sales only up 1.6 per cent. Motorists appear to be hanging onto their vehicles for longer, not least because of the rising cost of car finance.
It all adds up to a pretty negative brew for manufacturers. The likely result of net zero will be a much-shrunken European car industry – as it can’t afford to sell us petrol models and relatively cheap Chinese-made electric cars (manufactured with the aid of copious quantities of coal power) undercut its electric offering.
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