Carmakers will ask ministers for ZEV mandate review
Everything you should know about today's ZEV mandate mediation
Hello, I’m Tom Riley, and welcome back to The Fast Charge, a British EV newsletter.
Only story today… Everything you should know about today’s “ZEV mandate showdown” between Cabinet Ministers and business leaders, including…
How Nissan’s briefing to the FT kicked off a weekend of news
What’s been called for by carmakers (and how Labour has responded)
How the meeting will likely unfold (and who is probably in the room), plus
What will (or should) happen after it
Next week we’ll get into some other EV news that has been happening, such as Jaguar’s brand relaunch. As ever, if you have any thoughts, please do get in touch via my contact details below or simply reply to this email.
Also to flag, I will be at the London EV Show next Tuesday.
EV Cold War goes nuclear ahead of mandate meeting
Summary: A story published on Saturday morning in the Financial Times has thrown the EV industry’s recent Cold War fighting on the ZEV mandate’s future right out into the open. In short, the car manufacturer lobby is calling for a review of targets, meanwhile, investors and EV leaders have branded this “badly timed and ill thought through.” Let’s dive in…
First story: The FT article was based on a briefing from Nissan, the Japanese carmaker with a 6,000-person-strong factory in Sunderland. While being arguably one of the EV sector’s initial disruptors - launching the popular Leaf in 2010 - the manufacturer has since lagged behind competitors. The blame though has been laid at the feet of consumers for not being interested in EVs. “The reality is that the customer is not moving at the same pace as we had expected,” a Nissan source told the FT. They suggested that “a failure to do something” could lead to job cuts.
What the FT missed… is how Nissan has been in a bad state for a long time. So much so that a week ago it became public that an activist investor group from Singapore - Effissimo Capital Management - which has a history of pushing for senior management changes - has taken a stake in the company. Worth observing, the FT itself is owned by Nikkei, a Japanese media group.
Showdown meeting: In the FT’s reporting, it was revealed that carmaker concerns about the ZEV mandate would be discussed at a Whitehall meeting today (Wednesday) with Transport Secretary Lou Haigh, and also Business Secretary, Jonathan Reynolds in attendance. Many of their worries seem to hinge on their ability to be competitive and offer buyers affordability. They also continue to complain that the public charging network isn’t ready - despite there now being some 110,000 connection points, not to mention home charging.
Understandably upset? Look, if I were a manufacturer that’s invested billions into a country only for it to pull a rug from my feet, I’d be a bit peeved. But, that is not the case here. Manufacturers have had fair warning, and multiple chances to input. If they couldn’t see which way the weathercock was turning, do they get the right to be protected from their decision-making?
However… Where I do back them is that there’s been too much back and forth in recent years. When Boris’s government launched the ZEV mandate, it was especially ambitious. Since then, Rishi pushed it back. And now, in the most recent election, Labour made a manifesto commitment to reverse that to 2030. So I can understand why carmakers may feel backed into a corner. But is this just the nature of business, which thousands of other firms are seemingly muddle through.
Carmakers accelerate their briefings
Back to the FT story… When the article dropped, my phone began to vibrate like cheap bedposts fighting against the waves of a couple’s embrace. I got a torrent of messages suggesting this action was effectively the Society of Motor Manufacturers and Traders - the lobby group for carmakers - kicking off a much more robust call to review the ZEV targets. And they were right, with an even weightier article appearing in the Sunday Times the following morning. This article seemed to confirm several carmakers would be calling for changes and that ministers would consider “all options”.
Say, what? This line spooked people, and in response to the growing coverage, Lou Haigh told LBC on Sunday she was open to chatting “flexibilities” but insisted the mandate “will not be weakened”.
My read… the lashing out by carmakers reinforces what Haigh says. The government remains committed - and this aligns with what I’ve heard from DfT officials before. Frankly, carmakers wouldn’t be going to journalists with briefings if they were getting what they wanted. However, while perhaps putting the issue on the media agenda, as I said last week, SMMT’s narrative and that of carmakers is looking increasingly splintered.
And here’s an example… as Monday arrived, a new counter EV misinformation initiative was launched collaboratively by SMMT, Auto Trader, and ChargeUK to promote a set of “user-friendly facts about electric cars”. A superb idea, though the timing after a weekend of carmakers creating endless negative press about the EV transition left some branding SMMT duplicitous. In a further almost comical turn, the headline SMMT used for its news release about this campaign…“Industry unites to fight the electric fear.”
EV executives were unimpressed. I’m told this initiative has been in the works for a long time and involved lots of collaboration about how best to reach a wider audience. Based on my conversations, I get the sense people are laughing about the timing only because otherwise they’d cry. When I asked SMMT whether some of its members had splintered from the lobby group’s clearly more positive narrative on EVs, instead they told me calls for a review of the mandate and calls to tackle misinformation around EVs are both activities that intend to help increase EV uptake.
Mike Hawes OBE, SMMT Chief Executive, commented: “All manufacturers are committed to the zero-emission transition, and the industry is more supportive than perhaps any other sector, having invested billions over the past two decades in new models. But these are models we need to sell, so concerns over affordability and the ability to charge as easily as refuelling, amplified by pervasive misinformation, mean market uptake is not keeping pace with ambition. The industry is doing everything in its power to break down these barriers, but delivering bold targets also requires bold consumer support, so that everyone is able to benefit.”
When I asked Auto Trader about all the mandate coverage, a spokesperson told me: "The government has been consistent with the overall aim of electrification, and we urge any flexibilities to be minor in order to preserve the direction of decarbonisation. Confidence and clarity are key for consumers and industry."
Meanwhile, Vicky Read, CEO of ChargeUK, was much tougher saying: “These calls to weaken the targets in the ZEV mandate are badly timed and ill thought through.” She added: “Mess around with those targets and billions of pounds of private investment earmarked for the charge point rollout is in danger of being withdrawn, endangering tens of thousands of jobs, undermining economic growth and undoing the UK’s position as one of the world’s net zero leaders. The government must hold its nerve and use next week’s meeting to signal ongoing support for a policy that is evidently working.”
By Monday morning… EV leaders supportive of the mandate had begun to fight back even more. And in an area that Labour needs to champion: protecting investment in industry. First off, large energy firms including OVO, SSE, and BT Openreach urged ministers to stick to their guns. Then yesterday major pension funds such as Macquarie, M&G, Aviva, and Schroder also cautioned ministers.
Obviously… these businesses have a financial interest in keeping the ZEV mandate in place. But it’s bigger than that. Firstly, the mandate will create tens of thousands of jobs and hopefully ensure people can transition into new or slightly different roles - so any weakening puts those and existing jobs at risk. Secondly, legally, the UK must meet decarbonisation targets. And lastly, though arguably most importantly, if the UK pulls back on yet another major industrial policy, that’ll be a death rattle to the world.
Britain is closed for business. That is a headline already beginning to plague Labour following its Budget, and I’m sure adding investors with billions in the line to the existing list of farmers and large employers like supermarkets won’t be in their interest.
How will the meeting go down?
Well… It’s a fairly small gathering. The two ministers, presumably key officials from the Transport plus Business and Trade departments. And representing the private sector will be… SMMT, several carmakers (thought to be Nissan, JLR, Stellantis, and Ford), representatives for ChargeUK, and Octopus (who are the favoured child of Labour ministers).
What will happen? There is the potential for anything. I hope to hear that ChargeUK’s Vicky Read and SMMT’s Mike Hawes break out into singing ABBA’s S.O.S. However, more likely, I suspect the government will make the case that the ZEV mandate is working, reiterate the very generous flexibilities that already exist for carmakers (New Automotive has a great blog on these here), and that the industry has had acres of time to input into the mandate’s design previously. I expect ChargeUK and Octopus will reinforce this point, referring to the billions that rely on those targets.
Carmakers will sing back… “What happened to our grants; they used to be so good?”. This will likely be backed up by sales data suggesting consumers aren’t moving to EVs, and instead opting for more hybrids. They will call for more flexibility on how hybrids are treated under the mandate - which will serve struggling carmakers. I’m sure they will talk about having a charger mandate or the return of a plug-in grant, as they did at the Budget, though these may fall on deaf ears. One area I’m sure will arise is the topic of global trade, especially following Trump’s election and the challenge from Chinese brands.
China’s role in the EV debate cannot be understated. This week, Kier Starmer has held talks with President Xi and has been making overtures. Meanwhile, in Washington, soon President Trump - who is even more anti-China than Biden - may not want us doing that. Now, as anyone who has watched ‘The Diplomat’ knows, it’s very difficult to know what the real endgame for Starmer is - perhaps it is so he can withdraw later, but only once Trump supports Ukraine? But, likewise, Xi is in a sticky position too if their trade to the West shutters. He might prefer to back UK industrial projects to help Labour hit its missions. One you can only guess… In any case, I’m 100% certain China will come up today, especially due to our relaxed attitude to import tariffs so far.
Govt response: Over the weekend I asked DfT for a comment on the meeting, and Transport Secretary Lou Haigh said: “The UK now has the fastest growth of zero emission vehicles of any major European market, and we’re providing more than £2.3 billion to support industry and consumers in making the switch.” She also mentioned a meeting with Nissan on Monday that was “very constructive.”
And what happens after?
First to the door: Once the meeting concludes, I would hope there is an agreement by all attendees to agree to shared actions. Essentially, if when I write to you next week we’ve had MORE leaks and gossiping, that’s a bad outcome. Even if what’s agreed is extremely minimal, which some industry sources believe will be the case, the public needs to see consensus. In the ideal situation, maybe that’s a nice picture - some smiling business leaders and ministers - and a joint statement from the government and industry. Anything less will leave a vacuum for both sides to claim this, that, and the other.
Rebuild together: There is another reason attendees should want to do that. And that’s because of the often-forgotten cost in all these battles; industry relationships.
The EV sector is still quite new. It is meant to be an exciting industry, one that thrives on collaboration, encourages innovation, and ultimately delivers good. But when you have the industry pitted against each other like the past few days, it looks the opposite. Drivers need carmakers. Carmakers need networks. Networks need energy. Energy needs infrastructure. Infrastructure needs investors (and so on…). Like a vehicle, all the parts should be moving forward as one, especially to grow consumer confidence.
Finally… Whatever is agreed (if anything), it needs to be consulted on and impact assessments will be required - covering costs to businesses in all parts of this sector, as well as how the changes will impact the UK’s legal obligations to decarbonise. At several points in recent years, the High Court has ruled the government needs stronger plans in place for decarbonising, so they will want to avoid this with any watering down.
Let battle commence, and let’s see where we end up!
I'm not sure the EV industry is as divided as you make out. Public statements don't necessarily reflect private opinions. The Stellantis presentation I went to last month was 100% positive about EVs. Car companies can't just ask for money directly, and charger operators can't blame councils and planning rules too loudly.
The initial public enthusiasm centred around low running costs and excellent residuals.
The latter was purely down to lack of supply and was never going to last.
Unfortunately charging costs have hit the public imagination, and while in real life they are minimal non-EV drivers still assume they will need to make regular full charges. It is very difficult of the government to do anything, as a VAT cut for example would go straight into landlord's pockets via higher rents.
Car tax is also now a headline problem, especially as it's based on list price and EVs now often sell at a huge discount, but cutting costs for something that only affects those rich enough to afford a new car is an inevitable ethical problem.
All that means the only options open to the government are tinkering with the mandate, which would be a disaster or subsidise new manufacturing plants which I suspect is what manufacturers really want. Buying jobs is generally popular with the public and is probably a better use of money than the bottomless pit that is the NHS.