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ICE ban delay throws industry into turmoil

Prime Minister Rishi Sunak said the government is committed to reaching net zero by 2050 – but in a “more proportionate way”. A 2035 deadline is in line with EU plans, but will mean that the UK will no longer take the lead in the Road to Zero.
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20 September 2023

THE Prime Minister’s announcement to delay the ban on sales of new internal combustion engine (ICE) cars until 2035 have received a mixed review from the car industry which has been working towards a 2030 deadline.

Rishi Sunak said he still expects that by 2030 “the vast majority” of cars will be electric, because of improving technology and that the government is committed to reaching net zero by 2050 – but in a “more proportionate way”. A 2035 deadline is in line with EU plans, but will mean that the UK will no longer take the lead in the Road to Zero.

However, which much of the UK auto industry now outside the country, the early deadline could hit problems with many parts suppliers more geared towards 2030.

The Zero Emissions Mandate was intended to be the method applied to reach the required registration rate, but the fact that the details have still not been released ahead of the proposed implementation date of January 2024 tells its own story.

In its regular customer webinars cap hpi said the view for some time has been that the deadline for ending the sales of new ICE cars would be pushed out to 2035, in line with the rest of Europe, albeit with the action expected to be taken after the next general election.

The five-year forecast outlook currently runs to 2028, so cap hpi is not yet factoring in any short-term impact on BEV (or even ICE) in the immediate run-up to the phasing out of new ICE cars.

Dylan Setterfield, head of forecast Strategy at cap hpi, said: “I’m not sure it makes any difference to anything. We always said that 2030 was a very ambitious target and required significant action and forward planning to make it happen. Although there has been significant progress in infrastructure development, we think we are behind the BEV penetration required to naturally reach 100% BEV being a reality by 2030 without huge intervention.

“Our assumption had been that the ICE ban would be extended to 2035 by the next UK government, regardless of which party or parties would be in power, with the new incumbents blaming the current administration for not making sufficient progress to meet the 2030 target. Even if the 2030 deadline remains unchanged for passenger cars, we could see changes to the timetable for LCV, or the majority of hybrid vehicles allowed until 2035.”

Car giant Ford said if the UK government relaxes its plan to ban new petrol and diesel car sales by 2030 it will undermine the steps it has taken to get ready for the change. UK Chair Lisa Brankin said: “Our business needs three things from the UK government, ambition, commitment, and consistency. A relaxation of 2030 would undermine all three.”

Mike Hawes, Chief Executive at the Society of Motor Manufactures and Traders said a delay on banning the sale of petrol and diesel cars is sending a out a confusing message.

Speaking to the BBC, Hawes said the industry “continues to invest billions of pounds into these new technologies, electrified vehicles, battery vehicles, both abroad and here in the UK” – with support from the government.

Delaying the ban means a delay on switching to sustainable forms of transport. He questioned the government’s strategy if the end goal remains to move away from fossil fuels to sustainable transport.”

Paul Hollick, chair of the Association of Fleet Professionals, said: “While some of our members will be pleased about this because it takes the pressure to electrify away for the time being, the reaction that we are seeing across the fleet sector to this news is largely negative. The motor industry and their fleet customers have invested billions towards meeting the 2030 electrification deadline and while there are serious operational issues that need to be tackled, especially when it comes to electric vans, the assumption within our membership was that the government would need to provide more support, not move the goalposts.

“Where we go from here is difficult to say. The global motor industry doesn’t hinge on what the UK government does, so this is unlikely to do much to change future production plans away from electric vehicles (EVs) towards petrol and diesel while presumably, company car benefit in kind taxation will stay in its current form and continue to encourage fleets to electrify. In 2030, the vast majority of new cars on sale in the UK, and a substantial element of the used car parc, will almost certainly be battery powered.

“The overwhelming feeling is probably one of irritation. Fleets have done some incredible work when it comes to electrification and it feels as though the can has been kicked down the road in a fairly arbitrary fashion by a government that sees this move as politically expedient. There are, of course, a range of dangers.

“The value of existing EVs may be negatively affected; investment in charging infrastructure may fall away; and there may just be something of a manyana environment around electrification for the next few years. However, this must be resisted and it is especially important the local authorities are properly funded to ensure the installation of on-street chargers becomes widespread.”

 

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Business Motoring is the motoring resource for small businesses and SME small fleets running company cars and business cars.

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