ZEV Mandate Series Part 1: What is the ZEV Mandate?

This piece is the first in a six-part series New AutoMotive will release during the ongoing consultation period for the UK’s Zero Emissions (ZEV) Mandate, over April-May. This series will examine the current government proposals around the Mandate in detail, as well as putting the policy framework into its broader context.

The transition from petrol and diesel vehicles to electric vehicles (EVs) is a critical element of one of the most important technological changes in history: the end of the use of polluting fossil fuels in favour of cleaner and greener renewable energy. As you read this, this transition is playing out on roads across the UK. The government has publicly committed to ending the sale of new petrol and diesel vehicles in 2030, and that all new vehicles sold in the UK will be required to be zero emission vehicles (ZEVs) in 2035. Despite the government’s public pledge to abide by these targets, they are not currently legislated for and, until they are, are vulnerable to the vagaries of politics. The UK’s forthcoming Zero Emissions Vehicle (ZEV) Mandate will formally enshrine these 2030 and 2035 phase-out targets into law. The Mandate is being finalised this year, with the latest consultation period announced late last week, and will come into effect in 2024.

What is the ZEV Mandate?

In the simplest terms, a ZEV Mandate is a policy framework that incentivises manufacturers to sell more zero emission vehicles (both vans and cars) by assigning individual ZEV ‘credits’ to vehicles, and setting annual targets for the number of credits manufacturers must achieve. If these targets are not achieved, manufacturers receive a fine. Credit targets are set as a percentage proportion of the company's total car sales. Manufacturers that exceed their annual credit target may sell surplus credits to competitors, or count these credits towards their next annual target.

As the transition to zero emission transport enters its next phase, the role of public policy in driving progress will be crucial. The ZEV Mandate, which will be implemented via powers granted to the government under the 2008 Climate Change Act, is a key policy lever in facilitating the government achieving its net zero commitment. The idea of a ZEV Mandate is tried and tested. It is based on the policy framework pioneered in California’s ZEV Mandate, and is similar to the UK’s Emissions Trading Scheme and Renewable Obligation in that it is a market-led policy mechanism.

What is the Purpose of the ZEV Mandate?

Ultimately, the underlying purpose of the ZEV Mandate is what makes it so important. This purpose is simple; to facilitate a timely and equitable transition to electric transport. A key way it will do this is by legislating the 2030 and 2035 targets, and setting out a practical and achievable road map, via annual targets around electric car sales, in the lead up to 2030.

The ZEV Mandate will lay out annual targets for EV market share in the lead up to 2030, as seen in the graphs above.

How will the Mandate Achieve this Purpose?

Crucially, the ZEV Mandate will ensure the supply of EVs into the UK will be able to consistently meet demand. Manufacturers are increasingly prioritising the allocation of their limited stocks of battery electric vehicles to markets with policies incentivising them to do so. The ZEV Mandate will ensure that manufacturers are heavily incentivised to sell electric cars in Britain, meaning the UK doesn’t lose out to other markets.

The Mandate will also make electric cars more accessible, lowering the upfront cost of an EV by making them more profitable to sell in the UK. This increased accessibility would be a massive boon to British consumers, as EVs offer drivers far superior value for money compared to internal combustion engine (ICE) vehicles. This is largely down to one crucial fact; EVs are almost always cheaper to run than polluting petrol and diesel cars, and thus save motorists significant amounts of money.

An EV charged at home via an EV energy tariff can be up to 46% cheaper to run per mile than an ICE vehicle. EVs charged at home via a standard variable tariff are around 13% cheaper. More often than not, charging via the public network is also cheaper than running a diesel or petrol car. New AutoMotive have calculated that an electric car is cheaper per mile than a petrol car whenever it is charged at 69p per kWh - around 70% of all public chargers in the UK are below this price. In the midst of a generational cost-of-living crisis, these savings have never been more important to motorists.

What Should an Effective Mandate Look Like?

There are several base principles the ZEV Mandate should adhere to. These principles are relatively simple but, if implemented effectively, will ensure the Mandate is truly effective.

Firstly, the Mandate must be ambitious. Targets must drive the take-up of EVs forward, rather than simply acting as a backstop. Ambitious targets which are market responsive will mean more EVs on the road earlier and could also act as a catalyst to attract further investment and jobs to the UK by making it an attractive place to sell electric vehicles.

Secondly, the Mandate must be implemented in a timely manner. It should come into effect at the beginning of 2024, as originally planned. Any delay to its implementation would be a massive blow to the UK’s transition, and the country’s broader journey to net-zero.

Thirdly, and perhaps most importantly, the final version of the Mandate must be as simple as possible. While a tradable element is a crucial aspect of the Mandate, the banking and borrowing of credits should be strictly regulated to ensure that the mandate encourages manufacturers to transition to more EVs as soon as possible.

Next Steps

Last Thursday, the Department of Transport released the final consultation on the Zero Emission Vehicle Mandate. The consultation is the last chance for external stakeholders to contribute to the design of the policy lever prior to its finalisation later this year. Given this, the current consultation phase will be crucial to deciding the final design of the Mandate. Ensuring that the final version of the Mandate reflects the previously outlined principles will be crucial to ensuring a timely and equitable transition to electric vehicles. Submissions to this consultation can be made here.