The UK has confirmed their ZEV mandate with a mandatory BEV share of 22% in 2024. A calculation based on new registrations in the last 12 months leads to potential fines of 2.4 billion GPB (2.8 billion EUR) over all manufacturers, and this with a BEV share being already at 18%. To avoid these fines, manufacturers will need to convince more private buyers to opt for electric.
The ZEV mandate in a nutshell
Each OEM will have to reach a minimum share of 22% Battery Electric Vehicles (BEVs) or other emission-free vehicles (FCEVs) in their sales mix. The share increases stepwise to 80% in 2030.
Vice versa, this means that the share of Internal Combustion Engine (ICE) cars must not exceed 78% of new registrations in 2024. Manufacturers above this threshold will be fined 15,000 GBP per additional car.
For example, if an OEM registers 10,000 cars, only 7,800 can come with petrol, diesel, hybrid or gas engines. Should the OEM register 2,000 BEVs and 8,000 petrol cars, it will be charged a fine of 200 x 15,000 GBP = 3 million GBP.
Flexibility mechanisms can help a manufacturer to get additional allowances for ICE cars. Most prominently, OEMs with spare allowances can sell them to others and a brand can borrow allowances from a year in the future. However, the buying option also comes with additional expenses, while the borrowing means the brand will have to overtake the annual increase in BEV shares set in the law.
Resulting fines in worst case scenario
Dataforce calculated possible fines using the new registrations of the last 12 months (Oct 22 to Sep 23). Additional allowances through flexibility mechanisms are not considered. In this worst-case scenario, fines accumulate to 2.4 billion GPB (2.8 billion EUR).
This is also a good example how averages can be misleading. When calculating fines through the average 18% BEV share in the UK, the fines would be “only” 1.5 billion GBP.
Zooming into brand level, Ford and Toyota as two of the largest OEMs in the UK would pay the highest fines, followed by Land Rover, Nissan and Audi. While 100% BEV brands obviously do not pay fines (and can even generate additional revenue from selling allowances), there are also a couple of mixed BEV/ICE brands that already have sufficiently high electric shares, namely BMW, Cupra, Jaguar, Mercedes, MG and Porsche.