LABOUR MORE EXPOSED THAN EVER AS EU PREPARES TO SHELVE PETROL CAR BAN
Not for the first time this year, Sir Keir Starmer has been put in a difficult spot by the European Union – this time on electric cars.
The Prime Minister had attempted to end doubts surrounding Britain’s electric vehicle (EV) mandate in April, announcing plans to loosen EV sales targets for manufacturers while bringing forward a ban on new petrol and diesel cars to 2030, followed by a 2035 ban on hybrids.
At the time, it mirrored what was happening on the Continent, where the EU was also set to outlaw new combustion engine cars after 2035.
Yet with the trading bloc now said to be preparing for a climbdown on the petrol car ban, Sir Keir’s EV settlement looks to be on much shakier ground.
Already, carmakers – and the Conservatives – are calling for a fresh review of the electric car mandate timelines amid fears that British industry could now be dangerously exposed.
It means Starmer faces a fork in the road: follow the EU and retreat on the Government’s net zero ambitions, or hold fast in the hope of making the UK an EV trailblazer.
Richard Holden, the shadow transport secretary, says: “While the rest of the world is delaying and reconsidering electric vehicle mandates, the Labour Government brought the UK’s forward to 2030.
“Putting ideology before reality is killing UK manufacturing. Labour should never have made this decision and should change course before it’s too late for hundreds of thousands of British manufacturing jobs and billions more is wasted.”
Winners and losers
The Society for Motor Manufacturers and Traders (SMMT) has also warned the EV mandate may now have to be revisited, while Vertu Motors, a major car dealership chain, says a review is now “imperative for the future of our manufacturers and the wider industry”.
These opponents essentially argue that the targets for EV sales set by the mandate run too far ahead of consumer demand – creating a situation where manufacturers have to discount electric cars heavily, and lose money while doing so, to hit the targets.
At the same time, these critics say, it hands an opening to Chinese manufacturers to flood the UK market with their own, cheaper electric cars.
It is certainly true that the EV mandate’s headline targets are punchy. This year, 28pc of the cars sold by manufacturers are ostensibly meant to be electric, rising to 33pc in 2026, 34pc in 2027, 52pc in 2028, 66pc in 2029 and 80pc by 2030.
Yet some experts have pointed out that “flexibilities” and other allowances built into the regime – such as carbon credits that can be traded – mean the de facto targets manufacturers must meet are actually lower than this.
New Automotive, an independent consultancy, said this month that most carmakers were “comfortably on course to comply with the targets in 2025” – with notable exceptions including Vauxhall owner Stellantis and Nissan.
Ironically, the EU’s decision to allow combustion cars to be sold for longer will end up benefitting some of the companies with factories in the UK, according to Andrew Bergbaum, of AlixPartners.
That is because Britain’s car industry is heavily reliant on exports and Europe remains its biggest market, meaning Nissan, BMW-owned Mini and luxury manufacturers such as Aston Martin and Jaguar Land Rover (JLR) are among the likely winners of the flip-flopping in Brussels.
Still, Mr Bergbaum adds that there will be losers as well.
JLR’s parent, Indian giant Tata, unveiled plans for a massive battery factory in Somerset that will partly be predicated on European EV demand, while rival AESC is also building a large battery plant next to Nissan’s factory in Sunderland.
The EU’s reversal will hurt their business cases – and similar moves by the UK Government would inflict further pain.
To what extent still depends on the detail of the bloc’s climbdown, with one car industry executive saying the new 90pc target on emissions “doesn’t really move the needle” and will still entail massively ramping up EV sales.
What it does do, they say, is send a strong political signal that combustion engine cars “will need to be on the road for much longer.”
Strategic mistake?
Against this backdrop, electric car manufacturers, charging providers and battery makers are urging the PM to stand firm. Contrary to others, they also see this as an opportunity for Britain to lead in Europe.
James Alexander, of the UK Sustainable Investment and Finance Association, which represents green investors, says: “The EV mandate in the UK is crucial to giving investors the confidence to finance our electric vehicle charging network as well as developing the enormous potential of this industry in this country.
“This has the power to not just attract investment, but position the UK’s motor manufacturing sector at the heart of the global transition to electric vehicles.
“The Government must stick by its targets and give policy certainty.”
Staying the course could even become “a competitive advantage for the UK market”, argues Delvin Lane, of charging company InstaVolt, as it would incentivise EV-related investment to be diverted away from Europe and into the UK.
Andy Palmer, who was previously a top Nissan executive and boss of Aston Martin, also believes the EU rethink is a “strategic mistake” for a different reason.
Countries including Germany – Europe’s biggest car producer – Italy and Poland are said to be concerned that the existing combustion car ban risks running domestic manufacturers out of town and gifting the industry to China, which remains ahead on EV technology and has subsidised its companies heavily.
But technology “doesn’t slow down simply because politicians become anxious”, says Palmer.
“China is already years ahead of Europe and the United States in batteries, electric vehicle platforms and software.
“Protection may feel safe, but in the industrial world shaped by Darwinian competition, it ensures that your companies are no longer the fittest. Once that happens, recovery becomes extremely difficult.”
He reckons the UK now faces a choice. Follow the EU or adopt a “genuinely disruptive strategy… the kind of decision Margaret Thatcher understood.”
But what does that look like?
Palmer says: “Hold firm on electric vehicle regulation. Keep barriers to entry low. Reach an agreement with Beijing that allows emerging Chinese brands to establish manufacturing and engineering in Britain, using the United Kingdom as their base to prepare for entry into Europe and the United States.
“This may sound ambitious, but it is precisely what Britain once did with Japanese manufacturers in the 1970s and 1980s, and it mirrors the way China attracted European manufacturers through a long term industrial strategy that began in the early 1990s.”
On Thursday, a Whitehall source would not be drawn on whether the EU’s about-face could trigger a change to the Government’s approach. However, they noted that the PM’s reforms in April explicitly set the stage for a 2027 review of the requirements.
Whether Starmer will ultimately have to move faster than this is now an open question. And one he will surely be cursing Brussels for forcing on him.
2025-12-12T15:15:44Z