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This week has seen a flurry of news for the car industry as a result of the prime minister, Rishi Sunak, announcing that the ban on new petrol and diesel cars would be pushed back from 2030 to 2035. But everything isn’t quite as it seems…
A combination of long lead times for car manufacturers, the government’s upcoming Zero Emission Vehicle mandate (explained below), and next year’s general election, means that not much is really going to change as a result of the government’s latest policy u-turn.
What did the prime minister announce?
On Wednesday, Rishi Sunak announced that the government’s ban on the sale of new petrol and diesel cars (and hybrids) was being pushed back from 2030 to 2035.
This reverses the previous plan championed by former prime minister, Boris Johnson, which said that no new petrol/diesel/hybrid cars could be sold from 2030 onwards, with new plug-in hybrid sales phased out in 2035. Johnson had pulled the deadline forward from its original date of 2040.
Under the new plan, there will be a single deadline for all new petrol, diesel, hybrid and plug-in hybrid vehicles of 2035. After that, it will be zero-emission cars only – which currently means battery-powered electric vehicles.
This is the same timeframe that has been adopted by the EU and many other governments, whereas the UK had previously been ahead of the curve in phasing out new fossil-fuel cars.
Sunak also stressed that you’ll still be able to buy used petrol and disel cars after 2035, which he tried to make sound like an additional gift to us all. But that was always the case anyway so it changed absolutely nothing.
So – in theory – you’ll still be able to buy a new petrol or diesel car right through until 31 December 2034. The reality, however, may well be quite different.
Why did he do this?
Despite the best attempts of Downing Street to make it sound like the prime minister was doing us all a favour and that it was in some way connected to the cost-of-living crisis, it was nothing of the sort.
This u-turn is nothing more than an attempt to shore up Sunak’s support from a rebellious Tory back bench, and a desperate attempt to cash in on EV uncertainty ahead of a general election next year.
Various Conservative MPs are worried that they’ll lose their seats at the next election due to public fear and misguided belief about being forced to give up their petrol cars in six years’ time (which is not and has never been the case). Helped by regular EV bashing from the right-wing media, they think they’ve now succeeded in pushing back against the enemy of ‘Net Zero’. In reality, they’ve done nothing of the sort.
This fear and doubt has been stirred up by the massive expansion of the London Ultra Low Emission Zone, a deeply unpopular move by the Mayor of London, Sadiq Khan (a Labour politician), to tax older petrol and (not that old) diesel cars entering pretty much any road inside the M25.
In the one by-election the Tories haven’t lost this year (in a seat that Labour hasn’t won for about 50 years), ULEZ was a highly contentious issue. Having completely misunderstood why the ULEZ expansion has been so unpopular, the geniuses inside Downing Street decided to weaponise climate change scepticism on a national level in order to help their re-election chances.
So we have ended up with the bizarre scenario where a small number of Boris-loving, Brexiteer backbenchers have forced the prime minister to abandon Boris Johnson’s policy in favour of copying the EU. You couldn’t make it up…
How did the car industry react?
Unsurprisingly, not well. Ford was first out of the blocks with a statement even before the prime minister had made his u-turn, saying: “Our business needs three things from the UK government: ambition, commitment and consistency. A relaxation of 2030 would undermine all three”.
BMW (owner of Mini and Rolls-Royce) and Tata (owner of Jaguar and Land Rover) also made statements expressing their concerns.
In the hours after the prime minister’s announcement, my inbox and LinkedIn feed filled with similar statements from across the industry. The only one that was unequivocally in favour of the decision was – unsurprisingly – from the Petrol Retailers’ Assocication.
For the automotive industry, these sort of blatantly political games are hugely destabilising for their planning, especially for those companies who have invested heavily in the UK – or have announced plans to do so. You can be sure that there have been a number of urgent high-level board meetings in car company offices around the world, with executives questioning whether or not investing money in the UK is a sensible idea.
So car companies will now keep selling petrol cars for another five years?
Not necessarily. There might be some, but these are likely to be niche manufacturers. So if you’re currently saving for a new petrol-engined Ferrari and expect to have enough money by 2032, you might be in luck.
Most big-volume car companies won’t be radically changing their plans just yet. For a start, there’s always the possibility that the government could make yet another u-turn. Then there’s next year’s general election to think about, and also the ‘Zero Emission Vehicle mandate’ (we’re coming to that). Plus, many car companies will simply decide that it’s too late to significantly change their plans.
Building cars is a long-lead business, with complex supply chains and enormous investments over long periods of time. It takes seven to ten years to take a new car from an initial idea to full production, and that car will usually be in production for about seven or eight years, with a few updates along the way.
That means that car companies are already working on their post-2030 cars, and have already locked in their plans for winding down production of their fossil-fuel models between now and 2030. Those plans can’t easily be changed.
Car manufacturers have already phased out most diesel models and are currently spending billions of pounds rolling out new EVs to progressively replace their petrol and hybrid models. That’s not something they can simply pause for another five years.
As an example, Vauxhall announced a year or so ago that it would only sell EVs by 2028, with no new petrol, diesel, hybrid or plug-in hybrid models beyond that date. Going back on that would be logistically difficult at this late stage.
Some car companies may be able to continue selling some petrol and diesel cars up until 2035, but others won’t.
What is the Zero Emission Vehicle mandate and why does it matter?
When Boris Johnson announced the date for the ban on new petrol and diesel cars was being pulled forward to 2030, he didn’t actually put any plan in place to make it happen. He simply announced a policy and then left everyone else to sort it out.
Belatedly, the government came up with the idea of a Zero Emission Vehicle mandate. This forces car manufacturers to sell a minimum number of electric cars each year, starting at 22% in 2024 and increasing each year up to 80% in 2030. If the car companies fail to hit their targets, they can be fined up to £15,000 per car.
Despite this week’s announced delay to phasing out new petrol and diesel cars, the government says that the mandate will be continuing (although it hasn’t even been formally confirmed in the first place, and we’re only about three months from it coming into effect).
If the mandate continues unaltered, then this week’s announcement is almost meaningless. The same number of EVs will have to be sold by 2030 (80% of all new car sales), with the only difference being that the remaining 20% can still include petrol/diesel/hybrid cars, rather than only plug-in hybrids.
Will this hurt the car industry?
By undermining consumer and business confidence in EVs, Sunak is making it harder for car companies to sell them at exactly the time they need to be ramping up EV sales to hit the mandate targets.
That, in turn, means that they will be forced to sell fewer petrol/diesel/hybrid cars or pay enormous fines. This will hurt existing big-name car companies the most, as they’re also facing the threat of new EV-only Chinese brands arriving en masse to undercut them on price. That will inevitably make it even harder for them to hit their mandate targets.
There will be some horse trading of credits (car companies will be able to buy and sell their EV credits among one another), but it could well mean that some struggling European and Japanese companies get pushed out of the UK altogether.
What will Labour do if it wins the next election?
There will be a general election in the UK next year (or at the latest by January 2025, so there will certainly be an election campaign if not the vote itself). Currently, Labour is the hot favourite to win that election.
In the wake of Sunak’s press conference, Labour confirmed that it would revert to the 2030 date if it wins the election. That simply provides another reason for car companies not to change any of their plans just yet.
There has been a concerted campaign from much of the right-wing-leaning media to demonise electric vehicles at every opportunity. Almost daily, there’s another article bashing EVs or calling for the abandonment of the government’s targets for achieving Net Zero across the country by 2050.
There is plenty of concern from the public about the cost of electric cars and the question of being able to charge them, as we covered when we took an EV on a 1,000-mile road trip in summer. There are also entirely understandable questions about things like battery life and fires.
But the reality is that most of these concerns and questions have been answered and explained. There are positives and there are negatives to the shift from fossil fuels to electric power, but the overall move is a step forward – even if it’s two steps forward and one step back.
The anti-EV sections of the media also tend to assume that the current state of EV technology and charging will simply continue forward, when there’s actually enormous development going on that is rigorously addressing every weakness in EV tech while continuing to advance the strengths.
What about buying a used car?
Roughly 90% of households buy used cars rather than new cars, which means that the 2030/2035 deadline is largely irrelevant anyway. Of the approximately 10 million cars and vans sold in the UK each year, only about 2 million are new – and fewer than half of those are bought by private customers, with the majority being bought by fleets.
That means that only about 10% of familes would potentially be affected by the shift in the fossil-fuel deadline, and they are usually wealthier households with more disposable income to spend on a car.
You will still be able to buy and sell used cars of any kind well after the 2035 deadline. That has always been the case, and nothing has changed.
Realistically, the supply of near-new petrol cars will start drying up in the early 2030s as the majority of new cars become electric. The supply of near-new diesel cars is already showing this, as these are already being phased out by most car manufacturers (apart from large SUVs, where they still sell in reasonable numbers).
Older petrol and diesel cars will remain in plentiful supply until they finally wear out, or when the day comes when they are forced to be scrapped.
When will I have to give up my petrol car?
At this stage, there is no date for the removal of existing fossil-fuel cars from our roads. The general guess is 2050, simply because that’s when the government has to be at ‘Net Zero’ emissions, and fossil-fuel cars can’t meet that requirement.
By the time that anyone is ‘forced’ to buy an electric car, the technology and charging infrastructure will have both developed substantially – and costs will have also come down. If it’s not right for you right now, you can continue driving your fossil-fuel or hybrid car for as long as you like before you make the switch.
Summary
So what has the prime minister’s bombshell annoucement achieved?
He has undermined businesses confidence in the UK, which will almost certainly slow down the roll-out of vital new charging infrastructure. It may even see car companies redirecting investment out of the UK and into other countries.
He has undermined consumer confidence in electric vehicles, which will reduce demand in the short term. That means that if you already own an EV, he’s probably knocked a few thousand quid off the value of of your car. If you’re a car company or dealer selling EVs, your job just got harder.
Notably, he hasn’t offered any new money to help accelerate the roll-out of more charging infrastructure, which remains the number one obstacle to faster adoption of electric vehicles.
And in the end, he’s not actually going to slow down the shift from fossil-fuel cars to electric vehicles because the key policy that dictates how EV sales must be ramped up by 2030 is apparently not going to be changed. So any new petrol/diesel/hybrid car sales after 2030 must be coming at the expense of plug-in hybrids, which is frankly no great loss anyway.
That means that Rishi Sunak has announced a policy that has undermined the entire automotive industry, raised serious concerns about the value of investing in the UK, damaged consumer sentiment about electric vehicles and made Britain look weak on environmental issues – all to achieve nothing at all, except for temporarily appeasing a small number of climate-change-denying Tory MPs.
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