Sunak’s EV U-turn is ULEZ-related smoke and mirrors

A week before we went to press, Prime Minister Rishi Sunak announced that the UK would no-longer be phasing out ICE vehicles by 2030. Rather, the deadline would be pushed back to 2035. Not only was that decision a u-turn, it was a policy decision explicitly designed to slow down sales of electric vehicles, as number 10’s official statement at the time testifies: “Under revised plans, the Government will move back the ban on the sale of new petrol and diesel cars by five years, so all sales of new cars from 2035 will be zero emission. This will enable families to wait to take advantage of falling prices over the coming decade if they wish to.”

However, that understandably rattled the car industry which has invested billions globally and hundreds of millions of pounds in the UK transitioning to zero-emission vehicles, most of which are electric. Indeed SMMT chief executive Mike Hawes summed the view of OEMs: “The automotive industry has and continues to invest billions in new electric vehicles as the decarbonisation of road transport is essential if net zero is to be delivered…To make this a reality…requires from Government a clear, consistent message, attractive incentives and charging infrastructure that gives confidence rather than anxiety. Confusion and uncertainty will only hold them back.”

Similarly, representatives of the House of Lords were similarly “dismayed” with Baroness Parminter, Chair of the House of Lords Environment and Climate Change Committee colourfully stating: “The Prime Minister’s change of direction and delaying targets for EVs and heat pumps mean that the Government will not provide the leadership, certainty or consistency needed. He has chosen to kick the can down the road, rather than pick it up and put it in the recycling bin.”

Others, such as industry associations representing car dealers, petrol stations (the VRA and PRA) saw the bright side of the Prime Minister’s change of heart, with IGA chief executive Stuart James suggesting it was: “a reality check that the infrastructure required to support wholesale EV adoption in the UK is currently lagging behind…”.

However, while those in parliament may disagree, the global vehicle industry and consumer forces wield powers even greater than politics. Indeed, Kwik Fit data suggesting that the number of consumers planning to buy an electric vehicle next dropped from 42 per cent before the announcement to 38 per cent after, may have been the final nail in the coffin of the black-and-white-language the PM’s initial statement.

What followed as we went to press was a partial u-turn of the original policy u-turn in the form of “clarification” of the government’s electric vehicle strategy.  Just a week after pushing back the deadline for transitioning to electric vehicles to 2035, the government set out the percentage of new zero emission cars manufacturers will be required to produce each year up to 2030. The “zero emission vehicle mandate” requires 80 per cent of new cars and 70 per cent of new vans sold in Great Britain to be zero emission by 2030, increasing to 100 per cent by 2035. The mandate sets minimum annual targets, starting with a requirement for 22 per cent of new cars sold in 2024 to be zero emission, as originally proposed, although some manufacturers already plan to reach 100 per cent sooner.

Government suggestions that “the plans provide investors with confidence to invest in charging infrastructure” explain one of the many reasons for the partial climbdown on the previous policy shift a week before. The UK has already triggered investments in giga-factories and EV manufacturing, with over £6 billion in private sector chargepoint funding also ready. The government has also introduced several schemes to lower EV transition costs including grants for vans and for home charging stations.

Recent investment provides significant context too. BMW has announced its intention to invest over £6 billion in its UK factories, including a multi-million-pound investment to transform their Oxford plant, securing 4,000 high-quality jobs and strengthening the electric vehicle supply chain. This followed other major investments, including £4 billion from Tata to build a new gigafactory in the UK, and £1 billion from Nissan and AESC to create an EV manufacturing hub in Sunderland.

In other words, actions speak louder than words. The government might be trying to win over those against the complex and contradictory ultra-low emissions zones (ULEZ) policies controversial in towns and cities up and down the country, but it has already and continues to invest in policies supporting the transition to electric vehicles now. For example, just a day before the latest policy shift, the government announced £80 million of investment in bus routes, a figure means the government has invested £500 million in new zero-emission buses irrespective of what it says it is doing with cars.

Secondly, UK government policy on this point is largely academic because many large vehicle makers are already committed to transitioning to EVs ahead of the targets. And that’s where the future impact on the present and future tyre businesses can be seen. Original equipment electric tyre supply will continue apace and therefore replacement EV tyre demand will follow it – whatever the Prime Minister says next week.