Government throws industry £2.3bn lifeline and greater flexibility to support EV switch

The 2030 phase-out date for new petrol and diesel cars has been officially reinstated and full and plug-in hybrid vehicles can be sold until 2035 as part of a new multi-billion pound package of government reforms and funding to support the transition to zero-emission vehicles and take the pressure off manufacturers.

“We’re giving British carmakers certainty and stability, while helping working families make the switch to zero-emission vehicles,” confirmed a government spokesman.

At the heart of the plan is a £2.3 billion investment designed to support both manufacturers and drivers. This includes funding through the Automotive Transformation Fund, accelerated rollout of the UK’s charging infrastructure, and targeted support for ZEV vans, trucks, and motorcycles.

The government also confirmed that fines for missing annual ZEV sales targets under the Mandate will be reduced by 20%, to £12,000 per car and £15,000 per van. Additionally, increased flexibility will be introduced, including credit borrowing between years, to help firms stay compliant without immediate penalties.

Acknowledging calls from manufacturers during a recent consultation, which drew over 600 responses, the government is also introducing greater regulatory leniency:

• Hybrids Extended: Between 2030 and 2035, full and plug-in hybrids, such as the Toyota Prius and Range Rover Evoque PHEV, can still be sold.
• Supercar Exemptions: Small and micro-volume carmakers like McLaren, Lotus, and Caterham will be excluded from the ZEV Mandate entirely, preserving Britain’s high-performance vehicle industry.
• Utility Factor Rule Delay: The UK will delay adopting stricter EU emissions calculations for plug-in hybrids until 2030, allowing current standards to remain in place and offering certainty for manufacturers.

The updated framework confirms that petrol and diesel vans can continue to be sold until 2035 without added technological requirements. Van makers will only need to maintain 2021 emissions levels during the transition period. Meanwhile, small-volume van makers will receive tailored CO2 reduction agreements, and micro-volume firms will remain exempt.

The Government said the changes aim to balance environmental targets with economic realities, allowing the UK to stay on track for all new cars and vans to be zero emission by 2035, while avoiding industry disruption in the face of global economic headwinds.

“Manufacturers and consumers asked for clarity, and we’re delivering it,” said a government spokesperson. “We’re confident this will be welcomed across the sector, protect jobs, and unlock future investment.”

Sue Robinson, CEO of NFDA, commented: "NFDA has been lobbying, on behalf of its members, to have amendments made to the ZEV mandate for several years. The previous iteration of the ZEV mandate was causing significant harm to the UK automotive sector, which as the Government rightly points out, employs 152,000 people and adding £19 billion to the UK economy.

“We therefore welcome the changes made today as a step in the right direction for the UK automotive sector however it is vital that more incentives are available to encourage the consumer to move to EVs. The electric vehicle targets remain in place and the fines still remain too high for manufacturers. The UK remains the most aggressive regime for the EV transition and we would want the UK Government to align with the rest of Europe, in order to make our market as competitive as possible in a rapidly changing global marketplace.

“NFDA will continue to work with its members and the UK Government to ensure that the transition is a fair transition where consumers can afford new electric vehicles and manufacturers globally are confident in the UK automotive sector.”