Car makers successfully argued against small EV incentives

Car makers in the UK successfully argued against proposed incentives within the UK’s new ZEV mandate that would have encouraged the sales of cheaper, more efficient electric cars, as well as longer-range ones. The ZEV mandate forces car makers to sell ever increasing percentages of EVs, starting this year at 22%. Last year, EV sales stood at 16.5% of the total, according to the Society of Motor Manufacturers and Traders (SMMT). The system as introduced uses a straightforward format that counts one EV as one credit, after car makers lobbied for the government to remove wider proposals that would award a greater number of credits to cars with better battery efficiency, lighter weight or a smaller footprint. That would have encouraged a faster roll-out of smaller, cheaper EVs as car makers balanced EVs against the sale of more profitable combustion-engined models. Some car companies are in good shape to hit the target this year, while others are likely to fall well short. Of the all the major car companies, only Renault pushed for the inclusion of increased credits for selling smaller, cheaper EVs, according to consultation submissions newly obtained by Tom Riley, author of the Fast Charge industry newsletter. The low availability of affordable electric substitutes for petrol superminis has been a key stumbling block for the wider take-up of EVs, particularly among private buyers who traditionally skew towards smaller, cheaper cars. The EV share of superminis in 2023 across Europe stood at just 5.4%, against 15% for the whole car market. No favour for small EVs The UK government asked the industry back in April 2022 for its feedback on incentivising a range of EV options, including lower vehicle weight, smaller vehicles, cheaper vehicles and those offering more miles per kWh. Car makers argued that weighting credits towards certain types of EVs was too complicated and would punish those who had already invested in certain types of EVs. Instead they argued strongly for the much simpler 1:1 system that was ultimately agreed. Many argued that the ZEV mandate was arriving too soon to react with models that would be rewarded in the proposed system. For example, Toyota argued that favouring one type of EV over another would “unfairly impact” those EVs coming to the market now or in the near future. The firm – along with others, including Aston Martin, Bentley and MG – also pushed for part credits to be awarded for sales of hybrid cars, but this didn’t form part of the final legislation. JLR (formerly Jaguar Land Rover) was another against the idea of rewarding certain categories of EVs, but the company did suggest the idea could be revived after 2028. “With a 2028 introduction date, manufacturers will have time to adapt to the effect this may have on their certificate value,” it wrote in its submission. The general move against favouring smaller EVs over others shows that – as of mid-2022 when they wrote their submissions – car makers still hadn’t got full sight of their small EV strategy. Renault uniquely embracing the idea of weighting EV credits towards smaller cars is likely linked to its launch of the Renault 5 electric supermini later this year. So far, car makers have tended to launch larger EVs, in which they can better hide the still sizeable cost of the battery compared with smaller cars. No small cars last year made the UK’s electric top 10 and only three were in the compact category. MG argued that the UK wasn’t a large enough market to demand differing models, writing: “OEMs are unlikely to develop lots of specific models for the UK only." The government also gave car makers more leeway to offset a shortfall in sales in 2024 via various methods, including pooling into large groups, borrowing against future EV sales and buying credits from those with excess sales. Some car companies argued for pushing back the start date, claiming they weren’t ready, but car makers were generally in favour of the ZEV mandate system being introduced, though, according to the SMMT. “No one was actually asking for significant change in the trajectory. It's about making sure delivery is there, recognising where the market is, where the models are,” said CEO Mike Hawes.