ZEV mandate: 22% of new cars must be electric this year

The Government's proposed Zero-Emission Vehicle (ZEV) Mandate has become law – which will eventually force all car and van makers to only sell emission-free vehicles by 2035. 

The switch to electric-vehicle-only new car sales will be enforced incrementally over the next 11 years, starting with a legal requirement for 22% of new cars sold to be pure electric this year. 

In spite of the 2023 Government announcement that the ban on the sale of new petrol and diesel cars would be pushed back from 2030 to 2035, the rules mean the transition to electric vehicles (EVs) should ramp up this year, and will continue until the full ban comes into place. 

The ZEV mandate requires that 28% of new car sales are EVs in 2025, 52% are EVs in 2028 and 80% are pure electric in 2030. Then, by 2035, 100% of new vehicles sold must be emission-free. 

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Any car makers that aren’t able to meet these quotas could face a fine of £15,000 per car sold that isn’t compliant. At present, EVs only account for 16% of new car sales, and for some brands their electric car sales are as little as 3% of their overall annual figure. This has given rise to speculation that there will be further heavy discounting of EVs as car makers scramble to meet the target for the year. 

Here we explain everything you need to know about the mandate – and how it could potentially save you a lot of money on an EV. 

What is the ZEV mandate?

The ZEV Mandate is a legal requirement for car manufacturers to meet targets for new EV sales in the UK.

The Government is still finalising the targets between 2030 and 2035. However, it’s rumoured that the mandate will rise to 84% in 2031, 88% in 2032, 92% in 2033, 96% in 2034 and 100% in 2035.

If car makers exceed their EV annual sales targets, they can bank allowances for use in future years or trade them with other firms that have fallen short. In 2024, manufacturers can borrow up to 75% of their annual target. This will then drop to 25% in 2026, with the idea being to help firms with low EV volumes in the early stages of the scheme.

If manufacturers don’t meet the sales targets, they can use any of their banked credit to comply, or they can trade allowances with other manufacturers. Otherwise, a fine of £15,000 will be issued for every non zero-emission car sold outside of the allowance. 

The scheme only applies in England, Scotland and Wales. In Northern Ireland, an interim scheme, which will retain a scaled-back version of the existing CO2 emission regulations for new cars and vans, will be implemented until the Assembly passes the ZEV Mandate legislation.

What does the ZEV mandate mean for new car buyers?

According to official figures, 14.5% of all new cars sales in 2022 were fully electric, and in 2023, that figure has risen to 16.4% (in the year up to September). This means that the market is currently some way off meeting the 22% target. 

So, to help encourage consumers to buy more EVs – and avoid being hit with hefty fines – it’s highly likely that manufacturers will have to increase discounts on electric cars.

This will accelerate a trend that is already taking place; according to What Car?’s Target Price research, discounts for electric cars are up 201.4% since the start of the year. That’s significantly higher than the average discount across all fuels (+36.2%) and petrol cars (+9.8%).

"One problem at the moment is that electric cars are expensive," says What Car? Target Price expert, Pat Hoy. "The Vauxhall Mokka Electric is almost £12,000 more expensive than the petrol version, and that within itself is enough to stop someone from considering an electric car."

"One solution could be that manufacturers de-spec the cars to make them cheaper. However, that could also cause a problem because there could be a situation where electric cars are perceived as being less desirable than their ICE (internal combustion engine) counterparts," said Hoy. 

In the years leading up to 2035, manufacturers would ideally let demand for electric cars pick up organically. However, the ZEV mandate means they can no longer do that.

Hoy adds: “We've now got a situation whereby manufacturers need to sell EVs to avoid the fine, but consumers might not want them. That's where the discounts will come in, whether that’s with cash discounts, finance-related discounts or PCP APR discounts.

“It will be a difficult one to balance, because manufacturers won’t want to devalue their EVs. And if EV values do go through the floor, then that will add even more pressure to the market because that could impact depreciation.”

Which brands are likely to meet the 22% target in 2024?

Manufacturers such as MG, Polestar, Smart and Tesla are already well ahead of the 22% target, because they have majority (or fully) electric line-ups. This means that larger discounts are less likely to be available from these brands in the coming years.

Some manufacturers, such as Alfa Romeo and Dacia are only introducing their first EVs this year, and Seat, currently has no EVs in its line-up. However, all three brands are part of larger automotive groups, which means that they can benefit from credit sharing arrangements. For instance, Seat could borrow credit from Audi, Cupra or Volkswagen, because each brand is part of the Volkswagen Group, and have significant numbers of EVs on the market.

Other brands, such as Ford, Honda, Mazda, Toyota and Lexus, don't have this luxury, and the majority of their sales currently come from petrol, diesel or hybrid models. That means discounts could be used to increase the sales of their EVs so they can meet the target.

Are there any Government grants for buying a new electric car?

The Plug-in Car Grant (PICG) was scaled back for all zero-emission cars in June 2022. However, it is still available for certain vehicles:

• Wheelchair accessible vehicles (loan of up to 35%, capped at £2,500)

• Mopeds (up to 35%, capped at £150)

• Motorcycles (up to 35%, capped at £500)

• Small vans (up to 35%, capped at £2,500)

• Large vans (up to 20%, capped at £5,000)

Does the ZEV mandate impact vans?

The ZEV mandate will also apply for the sales of new vans. However, the rate that the target increases will be lower than that for new cars.

From 1 January 2024, 10% of new van sales will need to be fully electric. This will then rise to 16% in 2025, 24% in 2026, 34% in 2027, 46% in 2028, 58% in 2029 and 70% in 2030.

As with the scheme for cars, the Government is still finalising the targets between 2030 and 2035. However, it’s rumoured that the mandate will rise to 76% in 2031, 82% in 2032, 88% in 2033, 94% in 2034 and 100% in 2035.

Manufacturers will again be able to bank, buy or sell credit with other companies if the targets are exceeded or missed. Otherwise, a fine of £9000 will be issued for every non zero-emission van sold outside of the allowance.

What does the car industry say?

Following the announcement that the ZEV mandate had become law, Sue Robinson, chief executive of the National Franchised Dealers Association (NFDA) which represents car and commercial retailers across the UK, commented: “The introduction of the ZEV mandate into law will be a key policy in driving electric vehicle uptake and will heavily influence the automotive retail sector in its ongoing transition to electric."

Ford also welcomed the introduction of the mandate, with managing director, Lisa Brankin saying: “Ford has backed plans for a UK Zero-Emission Vehicle Mandate because it provides a strong investment signal to infrastructure providers to accelerate installation of new charge points.”

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