By Professor David Bailey
9th February 2026

The SMMT is right: we need a comprehensive review of the ZEV Mandate

The UK’s transition to zero-emission vehicles is a cornerstone of both its climate strategy and its industrial policy. Road transport accounts for around 27% of the UK’s domestic greenhouse gas emissions, making decarbonisation of cars and vans absolutely necessary if net-zero targets are to be met. The direction of travel is clear. And as someone who has been driving EVs for over a decade, I’m pretty confident that they really can work for many people.

What is far less certain is whether the current policy framework is calibrated in a way that delivers this transition effectively, affordably, and at scale. It is in this context that the Society of Motor Manufacturers and Traders (SMMT) is right to call for a comprehensive review of the Zero Emission Vehicle (ZEV) mandate.

The ZEV mandate requires manufacturers to ensure that an increasing proportion of their annual vehicle sales are zero-emission or face financial penalties. In principle, this creates a clear signal to accelerate supply. In practice, however, it risks placing regulatory pressure on the wrong part of the system.

Manufacturers can produce electric vehicles, but they can’t compel a government-mandated number of consumers to buy them, nor can they control the pace at which charging infrastructure, energy systems, and consumer confidence all evolve.

When regulation assumes demand will automatically follow supply, the result is often market distortion rather than smooth transition. Or put another, all sticks and no carrots doesn’t make for a good policy.

Recent data illustrates this gap clearly. In 2025, battery electric vehicles accounted for 23.4% of new car registrations in the UK, up from 19.6% in 2024 but well below the government’s mandated target of 28%. That mandated target rises to 80% by 2030.

Fleet buyers have driven much of the growth in electric vehicle uptake, while private consumer demand remains comparatively weak. Surveys consistently show that high upfront costs, uncertainty over resale values, and concerns about charging access continue to deter many households, even where long-term running costs may be lower.

A mandate that steadily increases supply targets without addressing these barriers risks forcing manufacturers into aggressive discounting strategies that satisfy compliance metrics but fail to reflect genuine consumer adoption.
Infrastructure readiness is a central part of this problem. While the UK has made big progress in expanding its public charging network, the distribution and quality of that infrastructure remain uneven. As of last month, the UK had nearly 88,000 public charge points, up 19% in a  year. But 48,700 of these were slow chargers and critically the network remains much less developed outside of London and the South East

And for many households, particularly those in dense urban areas without driveways, home charging simply isn’t an option. For them, the availability, reliability, and affordability of public charging is decisive, especially with higher VAT rates on public charging. The ZEV mandate implicitly assumes an infrastructure environment that does not yet exist at sufficient scale, creating a mismatch between regulatory ambition and lived reality.

This mismatch is already producing secondary market effects that risk undermining confidence further. In order to meet ZEV targets, manufacturers have increasingly relied on price incentives and discounting, particularly in the new car market.

While this may boost registrations in the short term, it has contributed to sharper depreciation for some EVs compared with their internal combustion equivalents. Used EV values have fallen quickly in certain segments, increasing caution among finance providers and leasing companies.

Residual value uncertainty feeds directly back into consumer hesitation in the new car market, particularly for private buyers who rely on predictable resale values or monthly finance costs. A rigid mandate that ignores these dynamics risks creating a self-reinforcing cycle of weaker than expected demand growth, heavy discounting, and rapid depreciation.

There is also the broader question of international competitiveness. The UK automotive sector operates in an international investment environment, where manufacturers allocate capital based on long-term regulatory stability and commercial viability. While the UK has strengths in EV production and battery research, overall investment per capita in automotive electrification lags some European peers for a number of reasons (including high energy costs).

If the ZEV mandate is perceived as inflexible, especially in the absence of sufficient demand-side support, it could perversely deter future investment rather than encourage it. A review would allow policymakers to ensure that the UK remains an attractive location for manufacturing and innovation while still pursuing ambitious emissions goals.

Technology choice is another area where a comprehensive review could strengthen, rather than weaken, the transition. Battery electric vehicles will indeed dominate the long-term decarbonisation of passenger cars, but transitional technologies still matter.

In particular, hybrids can deliver substantial emissions reductions in real-world use, especially in rural use cases where the charging infrastructure simply may not exist. A mandate that implicitly narrows acceptable pathways too early risks locking out pragmatic solutions before infrastructure and use cases are fully mature.

And most importantly, policy credibility is at stake. Climate targets only succeed when they are durable, credible, and broadly accepted by industry and the public alike. Targets that are routinely missed, softened at the last moment, or met only through artificial market behaviour risk undermining trust in the framework.

By calling for a review now, I don’t think the SMMT is trying to dilute ambition regarding Net Zero but rather to ensure that ambition is deliverable. Reviewing assumptions, aligning targets with infrastructure rollout, and strengthening demand-side measures would all help create a mandate that works with the market rather than against it.

Professor David Bailey works at the Birmingham Business School