A standoff has deepened between the government and the auto industry over electric vehicle sales targets, which companies say are too high for current consumer demand.
The government said it would start a consultation on targets but would stick to its deadline to phase out sales of new petrol and diesel cars by 2030.
The move comes after Vauxhall owner Stellantis announced it would close its Luton factory partly because of EV target rules, putting 1,100 jobs at risk.
The Society of Motor Manufacturers and Traders (SMMT) industry group called for urgent government intervention to protect the industry.
It warned that weak demand for electric vehicles and the obligation to meet sales quotas could have a “catastrophic impact on business viability and jobs”.
Ford last week announced it would cut 800 jobs in the UK over the next three years, but said the industry needed incentives from customers to support orders for electric vehicles.
“What we really need are government-backed incentives to accelerate the uptake of electric vehicles quickly, because without demand, mandates don’t work,” said Lisa, chairman and managing director of Ford UK. Mr Brankin spoke on BBC Radio 4’s Today programme. .
He said Ford was investing “significantly” in EV production and development, with “well over £350m” invested in electrifying the UK. “So we need to make it work,” she said.
Business Secretary Jonathan Reynolds confirmed he would discuss mandating so-called zero-emission vehicles, saying: “I understand. I understand the seriousness and the urgency of the situation.”
Under the current mandate, a certain percentage of the vehicles a company sells must be certified as zero-emission vehicles.
This year, EVs should account for 22% of a company’s car sales and 10% of its van sales. Companies must pay a £15,000 fine if they sell cars elsewhere.
By 2025, cars are expected to increase to 28% and vans to 16%, and companies will need to make 80% of their cars electric by 2030.
The system is flexible, allowing manufacturers who don’t meet their targets to buy “credits” from those who do.
In practice, this means buying credits from companies like Tesla and China’s BYD, which only make electric models.
Manufacturers say demand for electric vehicles is not as high as expected when the rules were written.
As a result, to avoid fines it will have to offer deep discounts on new cars or subsidize rival companies that only make electric cars and don’t have a manufacturing base in the UK.
Electric vehicle sales are increasing. In October, it accounted for one in five registered cars. However, industry insiders claim this is mainly due to unsustainable discounts.
Mr Reynolds said he told the audience at the SMMT annual dinner on Tuesday that he was “deeply concerned” about the way the current zero-emissions policy operates.
“I’ll be frank with you: I don’t believe that the policies that we inherited, especially those related to zero-emission vehicles, are operating today in the way that anyone intended,” he said.
“In fact, I’m very concerned about how it’s working at the moment.”
He said: “We know you need certainty, so we are moving forward with that consultation quickly to give you clarity on your travel direction and to provide you with an update in the coming weeks. We will make sure you get the answers you need.”
At a meeting between Mr Reynolds and Transport Secretary Louise Hague last week, car companies called for more flexibility to be built into the regulations.
Nissan, which produces EVs at its factory in Sunderland, said the rules “undermine the business case for manufacturing cars in the UK and the viability of thousands of jobs and billions of pounds of investment”.
A number of options have been proposed to change the rules for selling EVs, including greater flexibility by allowing sales credits to be transferred between cars and vans, and credits for UK-made EVs sold overseas. This includes providing new incentives for private buyers to choose EVs.
In its manifesto, Labor said it would bring forward the target date for ending sales of new petrol and diesel cars to 2030. The target is still considered non-negotiable and it is understood that annual sales figures will remain unchanged.
The government is open to changing the obligation in other ways, but wants the industry to reach broad agreement on what those changes should be.
Mr Hague said earlier this month that the government would consider “flexibility”, but insisted it would “not weaken the mandate”.
