OEMs need certainty more than another change in ZEV targets - Solera cap hpi

MOST car manufacturers need policy certainty on EV sales targets more than adjustments to the ZEV mandate according to Solera cap hpi.

According to reports the Government plans to reduce the 2030 ZEV Mandate target from 80% to 50% following concerns from carmakers and unions about the impact on investment and jobs.

Matt Freeman, managing consultant at Solera cap hpi (pictured), said manufacturers just as concerned about knowing where they stand as they are about the exact percentages.

“The automotive industry plans years in advance. Product programmes, factory investment and supply chains are all built around long-term assumptions. What manufacturers need above all else is stability and a clear understanding of what the market is expected to look like.”

“A move to 50% would give some manufacturers additional flexibility, particularly those still balancing investment between electric and combustion-engine vehicles. The reality is that different OEMs are at different stages of the transition.”

Matt Freeman, managing consultant, Solera cap hpi Tweet

Freeman said many manufacturers have already committed substantial resources to electrification, making consistency more important than the precise target itself.

“For some OEMs, greater flexibility will be welcome. Others have already invested heavily in EV production, dedicated platforms and future model programmes. Those decisions were made years ago and cannot simply be reversed. That is why a stable policy environment matters. Businesses can adapt to change, but they need confidence to make long-term investment decisions.”

ZEV influence on demand is ‘overstated’

He also believes the debate often overstates the influence of the ZEV Mandate on actual EV demand.

Fleet and business registrations continue to account for the majority of new electric vehicle sales, with estimates placing the figure at between 70% and 80% of the market.

“The fleet sector remains the key driver of EV registrations. That market is influenced far more by tax policy than by manufacturer sales targets. Salary sacrifice schemes and company car taxation continue to make electric vehicles attractive to many business users.

“When somebody is choosing their next company car through a salary sacrifice scheme, they are not thinking about the ZEV Mandate. They are looking at the financial benefits available to them. Benefit-in-kind rates and taxation policy remain among the strongest drivers of EV adoption in the UK.”

Freeman said any changes to tax incentives would likely have a more immediate effect on demand than changes to manufacturer sales targets.