Bosses from 13 major manufacturers have written to the Chancellor pleading for a fresh wave of electric vehicle incentives to turbocharge floundering sales.

In a letter to Rachel Reeves ahead of the Budget, the Society of Motor Manufacturers and Traders and a host of car firms, including BMW, Ford, Toyota and Volkswagen, said government targets are putting too much pressure on the industry at a time when private EV demand is wavering.

That’s despite September being the second best month for EV sales on record with 56,387 registrations.

Executives are calling for the introduction of new subsidies to boost sales as many car firms are falling behind the Government’s binding Zero Emission Vehicle (ZEV) Mandate requirements.

Bosses from 13 major manufacturers have written to the Chancellor pleading for a fresh wave of electric vehicle incentives to turbocharge floundering sales

Jaguar Land Rover, Honda, Kia, taxi maker London Electric Vehicle Company, Mercedes, Nissan, Polestar, Stellantis and Volvo were the other major auto companies to sign the letter.

The hope is that Ms Reeves will take pity on their situation, with manufacturers set to face steep fines for failing to meet EV sales targets in 2024. 

The ZEV mandate, launched in January, is designed to force makers to increase their share of electric vehicle sales in each of the next six years as part of the phase-out of new petrol and diesel models from 2030.

For this year, the mandate requires that 22 per cent of every brand’s sales are fully electric, rising to 28 per cent next year and 33 per cent in 2026.

Four in five new car sales in 2030 will need to be electric, with the remaining 20 per cent allowance going only to certain hybrid models. 

In 2035, only zero-emission cars – the majority of which will be EVs – will be allowed in showrooms. 

Failure to meet the annual targets could result in fines of up to £15,000 per car – and £18,000 per van – below the threshold. However, manufacturers can also buy credits from rival marques who are above the required objectives, such as EV-only Tesla.

Manufacturers also receive credits towards their ZEV mandate counts if they show evidence of slashing the CO2 emissions of their new petrol and diesel models. 

In their letter to the Chancellor, car said ‘our EV market looks set to miss its target’ for 2024.

This is despite 20.5 per cent of September’s new cars being battery models. 

That said, for the year to date, EVs account for only 17.8 per cent of registrations, which is well below the ZEV requirement.

SMMT registrations figures show that battery electric vehicles (BEVs) account for just 17.8% of all new car sales this year. This is below the 22% threshold set out by the ZEV mandate

A slower-than-anticipated uptake of battery vehicles isn’t just impacting UK car sellers.

Manufacturers have in recent months responded to a global deceleration in EV demand with both short and longer-term adjustments to strategy.

Fiat, for instance, has put a seven-week suspension on production of its 500e model due to a decline in sales, Vauxhall has slashed prices of its EVs and Toyota said it has downgraded its 2026 electric car production plans.

Others have taken more dramatic approaches, with Volvo ditching its proposal to only sell EVs from 2030, Ford considering rationing new petrol availability to artificially inflate its EV registrations share, and a number of brands – including Mercedes and Skoda – extending the availability of internal combustion engines.

The SMMT says manufacturers had discounted EVs by a cumulative £2billion so far this year as part of industry efforts to invigorate appetite but said it has caused an ‘astronomical’ financial strain that is ‘unsustainable’.

Mike Hawes, SMMT chief executive, said: ‘Despite manufacturers spending billions on both product and market support – support that the industry cannot sustain indefinitely – market weakness is putting environmental ambitions at risk and jeopardising future investment. 

‘While we appreciate the pressures on the public purse, the Chancellor must use the forthcoming Budget to introduce bold measures on consumer support and infrastructure to get the transition back on track, and with it the economic growth and environmental benefits we all crave.’

In the letter, car makers argue that ‘mandates don’t make markets’ and that there need to be subsidies towards buying electric cars to stimulate demand.

This could include easing various taxes on purchases, including a cut to VAT. 

They wrote: ‘As an industry we will likely miss those targets and a significant number of brands face the prospect of either buying credits from another company or paying swingeing compliance payments.’

Sue Robinson, chief executive of the National Franchised Dealers Association representing showrooms across the country, has also said the ZEV mandate is ‘unintentionally restricting the new car market’ and called for a review.

However, Ben Nelmes, chief executive at green think tank New Automotive believes not a single car maker will need to pay ZEV-related fines this year – though suggests some may have to resort to buying credits from rivals, including Chinese groups including BYD and MG parent company, SAIC.

The Zero Emission Vehicle (ZEV) mandate requires 22% of all car sales by major manufacturers to be EVs this year to escape punishing fines of £15,000 per model. With just three months of 2024 remaining, which brands are on track to hit targets – and which are not?

Which car makers are behind ZEV mandate targets?

Independent transport research organisation New Automotive tracks major car makers and their current sales performance in relation to meeting ZEV mandate targets.

In its latest update inclusive of September registrations, it said: ‘Some manufacturers have massively improved performance this month – Ford cut their deficit by 20 per cent, whilst Stellantis and Honda have both halved their gap, and are on course to end the year with a surplus. 

‘September’s sales also mean the industry has – when CO2 emissions outperformance is taken into account – exceeded the ZEV mandate target for 2024, and now has an excess of credits. 

‘This is important because it means that the price paid by individual manufacturers who fall short of targets – and need to trade with firms who have outperformed – will be low. The glut of supply has made this a buyer’s market.’ 

EV-only brands, including Tesla, BYD and Great Wall – the Chinese parent group of Ora – are, obviously, all safe.

Polestar is another brand which is all-electric. However, because it comes under its majority shareholder brand Geely – which also owns Volvo – is currently tracking 18.3 per cent towards target overall, with an EV sales percentage of 37.9 per cent as of the end of September.

BMW is one of the mainstream car makers that’s on course to meet ZEV requirements thanks to its impressive EV sales and reductions to CO2 across its combustion engine line up 

Mercedes is on course to match the 22% ZEV mandate requirement in 2024

Yet there are other mainstream brands that are also on course to exceed 2024’s ZEV requirements. 

This includes both German luxury powerhouses BMW and Mercedes-Benz, as well as SAIC, which owns MG Motor, which offers a number of relatively affordable combustion-engine and battery-powered models.

In the middle of the field are a few parent companies tracking just shy of the ZEV sales target, including Stellantis (parent group of Citroen, Fiat, Peugeot and Vauxhall) at 21.3 per cent, Suzuki (19.6 per cent) and Subaru (21.5 per cent). 

Stellantis – which is one of the world’s largest car conglomerates – is predicted to hit 21.3% of the 22% ZEV mandate target for 2024

Some car companies including VW, Ford and Honda aren’t estimated to hit the 22 per cent ZEV target but are likely to use the credit system available to make up their EV shortfalls.

The VW Group records 13.9 per cent of sales as EV, while Ford, which is predicted to hit 17.4 per cent of the ZEV sales target, with 8.6 per cent EV sales.

Honda is on course for 19 per cent.

On the flip side, brands that are falling behind ZEV mandate requirements include Hyundai, Mazda, Nissan, Tata (JLR’s parent group) and Toyota.

Toyota has the joint lowest ZEV share across sales in 2024. It currently offers just one battery vehicle – the bZ4X pictured

New Automotive’s ZEV tracker shows that JLR’s parent company Tata and Toyota are the two manufacturers set to miss targets by the most

Toyota, which has been openly reluctant to ditch hybrid technology in the pursuit of full electrification, is predicted to end the year on just 10.9 per cent of the 22 ZEV sales target needed, with EVs accounting for just 10.1 per cent of all sales so far this year. 

That’s the joint lowest of all 20 major car firms tracked by New Automotive. 

Toyota currently offers just one EV model in its range – the bZ4X – while its sister brand Lexus has the RZ and UX powered entirely by batteries. 

Jaguar Land Rover’s parent group Tata is also not doing well against the ZEV mandate targets, with the same estimated real ZEV sales target as Toyota at only 10.9 per cent.

This is perhaps not surprising as Land Rover has been slow to adopt EV despite sister brand Jaguar selling its I-Pace since 2018.

While the Coventry-based brand is undergoing a major overhaul, with Jaguar plotting a move to becoming an all-electric brand from next year and Land Rover promising six fully-electric models due to launch in the next five years, there is currently not much of an all-electric offering while the world awaits the new electric Range Rover.

JLR’s parent company Tata is also set to miss ZEV mandate requirements by some distance in 2024. Jaguar is set to become an exclusive EV brand next year. However, the I-Pace (left) is currently the only EV both it and Land Rover offer

Mazda is only slightly ahead of Tata and Toyota, at 11.7 per cent of the target, with EVs accounting for a mere 4.9 per cent of new car sales.

Hyundai and Nissan are faring better with 15.8 per cent and 16.4 per cent ZEV sales target respectively.

New Automotive calculates the implied ZEV target by estimating the number of credits each manufacturer is expected to generate based on the CO2 ratings of newly registered ICE cars in 2024.

It bases the ZEV bulletin on DVLA data which is released monthly.

The research organisation also said that you can see ‘CO2 flexibility in action’ with a ‘significant amount of credits are likely to be earned from the improvement in the average CO2 ratings of newly registered vehicles’.