Government Reshapes Zero-Emission Rules to Ease Pressure on Manufacturers

In a bold reaffirmation of its commitment to phasing out fossil-fuel-powered transport, the UK Government has announced a suite of adjustments to its Zero Emission Vehicle (ZEV) Mandate—a policy intended to steer the country toward an all-electric automotive future. While the core ambition remains unchanged—ending the sale of new petrol and diesel cars by 2030—the roadmap now includes new flexibilities for automakers, fresh consumer tax incentives, and more breathing room for hybrid technologies.

The revised mandate, unveiled over the weekend of 6 April, strikes a careful balance: it doubles down on net-zero ambitions while acknowledging the economic and geopolitical turbulence that’s reshaped the automotive landscape, particularly in the wake of newly imposed U.S. tariffs and lingering supply chain complexities.

Under the updated structure, automakers can front-load or back-load ZEV credits, essentially allowing them to bank future electric vehicle (EV) sales to accommodate market realities. This is a strategic pivot: while the 2030 deadline for the cessation of new internal combustion engine (ICE) car sales still stands, manufacturers can now adjust sales curves in response to fluctuating demand and infrastructure readiness.

Prime Minister Keir Starmer said: “Global trade is being transformed, so we must go further and faster in reshaping our economy and country through our Plan for Change. I am determined to back British brilliance. Now more than ever, UK businesses and working people need a government that steps up, not stands aside.

“That means action, not words. So today, I am announcing bold changes to the way we support our car industry. This will help ensure home-grown firms can export British cars built by British workers around the world, and the industry can look forward with confidence, as well as back with pride.”

Additionally, both plug-in and full hybrids have earned a reprieve, with their eligibility extended through 2035, giving the industry more time to scale battery technology and production capacity. Light commercial vehicles, particularly vans running on ICE, also get a grace period until 2035.

To accelerate EV adoption across the UK, the government has hinted at a slew of tax incentives—described as “worth hundreds of millions of pounds”—to be detailed further in the Industrial Strategy white paper, due later this spring. These incentives are expected to make electric vehicles more financially accessible while supporting the broader industrial transition to zero-emission manufacturing.

Current subsidies remain active, including:

• A £2,500 grant for plug-in vans

• A £5,000 grant for larger electric vans, both extended through 2025

• A £350 home charging discount for flat dwellers without private driveways

Such incentives complement the market momentum: March 2025 saw EV sales climb 40% year-on-year, underlining strong consumer interest despite lingering affordability and charging infrastructure challenges.

At the heart of the ZEV Mandate lies a credit system designed to ensure compliance while offering adaptability. Starting in 2024:

• 22% of all new car sales

• 10% of new van sales

•  ...must be zero-emission. These figures will escalate annually, culminating in an 80% ZEV share by 2030 and a complete transition—100%—by 2035.

Manufacturers failing to meet targets can purchase credits from those exceeding them. Credit borrowing is allowed now, with repayment timelines stretching through 2030, providing cushion to brands still ramping up EV capacity. Notably, brands under the same corporate umbrella can pool their credits, enhancing strategic coordination.

In a further twist of flexibility, credit conversion rates have been refined:

• 1 car credit = 0.4 van credits

• 1 van credit = 2 car credits

This cross-category liquidity empowers manufacturers to adapt strategies dynamically across model types and markets.

Not every manufacturer is bound by the same obligations. Micro-volume brands and luxury automakers—McLaren, Aston Martin, and their ultra-high-performance peers—are exempt from the mandate. This recognizes the outsized innovation risks and lower-volume output of these niche players.

Originally intended to go live in January 2024, the ZEV mandate faced industry skepticism and calls for delay. With the updated policy framework, the government is reaffirming its stance: the future is electric, but it will not be built on rigidity. It will be shaped by responsiveness—a policy that breathes with the market without losing sight of the climate imperative.

Energy Secretary Ed Miliband said: “It is very important that the government has strengthened our commitment to our world-leading EV transition plan.

“This plan will benefit UK consumers by expanding the market for cars that are cheaper to run. And it will support our domestic manufacturing so we can seize this global opportunity.”