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UK Announces Revised Zero Emission Vehicle (ZEV) Mandate to Support Automotive Transition
The UK government has unveiled a revised ZEV mandate aimed at easing the transition for car manufacturers while maintaining its commitment to phasing out fossil fuel vehicles. The new mandate, announced in 2025, includes several key updates that provide flexibility and extend deadlines for hybrid vehicles.
The phase-out date for new petrol and diesel cars remains 2030, but hybrid cars are now permitted to be sold until 2035. Similarly, all types of powertrains for vans—including petrol, diesel, hybrid, and plug-in hybrid—are allowed until 2035 as well. This extension provides relief for manufacturers who had expressed concerns about the readiness of electric vehicles (EVs) and demand for hybrids.
The mandate retains flexibilities that allow manufacturers to generate "credits" by reducing emissions from their non-ZEV fleet relative to a 2021 baseline. This credit scheme, originally set to expire in 2026, is now extended to 2029, offering more flexibility and rewarding CO2 savings from hybrids.
The government has also lowered penalty fines for non-compliance with the mandate. Fines for cars are reduced from £15,000 to £12,000, and for vans from £18,000 to £15,000 per vehicle.
The new ZEV sales targets are progressive, with headline targets of 28% of vehicle sales in 2025 and 33% in 2026. However, actual targets may be lower due to flexibilities. The industry has so far met targets with around 23% ZEV sales in early 2025.
The revised mandate is expected to have a significant impact on car manufacturers. The revisions aim to ease pressure on manufacturers by extending flexibilities and allowing hybrids longer market life, which some manufacturers had lobbied for. The mandate has already driven substantial industry investment in EVs and batteries, with £23 billion in announced investments over three years, including major commitments from Nissan, Tata, and BMW to boost UK EV production.
Despite challenges such as volatility in the market and ongoing lower-than-target BEV market share (21.6% YTD vs 28% target), the flexible mandate helps mitigate penalties and supports continued EV adoption. The government maintains its commitment to the net-zero strategy and sees the mandate as the largest carbon-saving measure in transport, providing certainty while protecting jobs and fostering UK leadership in electric vehicle transition.
In terms of market figures, Plug-in Hybrid Electric Vehicles (PHEVs) saw a growth of 37.9% year on year in March, capturing 9.5% of the market. Between January and March, PHEV registrations rose 26.1%, giving it a 9.2% market share. Battery-electric vehicles (BEVs) led the market in terms of registration improvement in March, with a 43.2% increase year on year. The all-electric technology's market share jumped by 4.2pp to 19.4% in March.
A total of 357,103 new cars were delivered in March 2025, marking the best March total since 2019. The UK's new-car market saw a significant increase in registrations in March 2025, up by 12.4% compared to the previous year.
In the light-commercial vehicle market, petrol, diesel, HEV, and PHEV sales will continue until 2035, with manufacturers ensuring that CO emissions between 2030 and 2035 do not grow above levels from 2021.
The government has also introduced the Expensive Car Supplement (ECS), applicable to vehicles registered from 1 April. The ECS, which was previously set at £40,000, will be raised by £20,000 to £60,000. Additionally, the government has reduced the fine-per-unit over the required ZEV target, from £15,000 to £12,000.
Calls were made for a reduction in VAT on public charging to benefit those without off-street parking, but the UK government has not announced any incentives for the purchase or ownership of electric vehicles. However, the revised ZEV mandate, with its extended deadlines and flexible credit scheme, should help encourage the adoption of electric vehicles in the UK.
- The revised ZEV mandate in the UK has extended deadlines not only for hybrid cars but also for vans, which aligns with the finance sector's concerns about the readiness of electric vehicles and demand for hybrids in the automotive industry.
- The government's reduction of penalty fines for non-compliance with the ZEV mandate reflects a recognition of the challenges faced by manufacturers as they transition towards Zero Emission vehicles, particularly in the context of the technology sector.
- The sports world is also affected by this transition, as the new mandate aims to support continued EV adoption, which could have a significant impact on the UK's overall lifestyle and industry, affecting all sectors including transportation.
- The weather, too, remains a crucial factor in this transition, as the government's commitment to phasing out fossil fuel vehicles by 2030 is a bold step towards a more sustainable future, aligning with global efforts to combat climate change.
