Industry responds to delay on ban of new ICE cars and vans

Rishi Sunak has announced that the UK ban on new petrol and diesel cars and vans has been pushed back from 2030 to 2035.

“We’re going to ease the transition to electric vehicles. You’ll still be able to buy petrol and diesel cars and vans until 2035,” the Prime Minister said in a speech from Downing Street yesterday. “Even after that, you’ll still be able to buy and sell them secondhand.”

Responding to the Prime Minister’s speech yesterday which confirmed that the 2030 ban on the sale of new petrol and diesel cars would be delayed until 2035, Asset Finance Connect’s Head of Content David Betteley said: “The deferment of the ban on ICE vehicles doesn’t come as a massive surprise. Mark Harper, (Secretary of State for Transport) indicated that there would be a big announcement “sooner rather than later” when he spoke at the SMMT “Electrified” conference on Monday this week. Well, we now know what the contents of that big announcement are!

“The rection has been mixed to say the least. Some OEMs are in favour (JLR, Toyota) others against (Ford), others (Stellantis) on the fence saying that it will make no difference to their plans. OEMs do work on long gestation periods for the production of a new car and all will already have started planning for what their 2030 line up will look like. They are unlikely to radically change those plans so I would expect there to be a lot more BEV choice for consumers regardless of the change in transition date.

“However, the issue is what will happen now to demand for new and used BEVs? With the phasing out date for ICE pushed back, there will be less customer urgency to make the change which may well result in weaker demand from the private sector with the fleet sector hopefully taking up the slack, driven by continuing attractive BiK taxation treatment. The other knock-on effect will likely be a further weakening of RVs on used BEVs which, in turn, will make them more affordable as a second hand purchase….so perhaps a silver lining here for customers at the expense of the industry.

“Turning to the problem that most customers cite as a reason for not changing to BEV…..the charging infrastructure. The new announcements can’t be seen by the charging industry as increasing the pressure to hasten the roll out, probably in fact just the opposite, especially if demand for new BEVs does weaken. This could be just one of the unforeseen consequences of the U-turn.

“Finally, the elephant in the room (there’s always one)……..the ZEV mandate. The government website still says that HMRC are “analysing feedback” from the consultation that ended on the 24th May 2023 and the word from Westminster is that a further announcement will be made tomorrow. It wouldn’t surprise me at all to see the 22% by 2024 watered down also. That would be a great help to a number of manufacturers, particularly JLR whose parent has recently made a £4bn investment in a new battery gigafactory. Perhaps a bit of breathing space to get that up and running?”

Stephen Haddrill, Director General of the Finance & Leasing Association, commented: “In 2019, the UK committed to a legally binding target of net zero emissions by 2050, but that was three Prime Ministers ago, and before the Covid and cost of living crises.

“The approach of subsequent PMs has seen the noisy launch of new initiatives followed by their quiet withdrawal – all while Government has publicly affirmed its unwavering commitment to Net Zero and, only weeks ago, critical staging posts like the 2030 ban on the sale of new petrol and diesel vehicles.

“While today’s announcement may be positioned by some as pragmatic, to those businesses that relied in good faith on the original 2030 deadline, it represents millions of pounds of mis-directed or mis-timed investment. As for the wholesale funders who provided that finance for firms, regaining their trust will be an uphill battle.

“Delivering net zero requires business and public confidence in policy – that is being squandered.”

Gerry Keaney, BVRLA Chief Executive, said: “The announcement will frustrate many while offering relief to others. Those that have made huge financial and strategic investments in this technology and mobilised their customers and workforces for decarbonisation will be worried that Government is applying the brakes.

“Others will be grateful for the extra breathing space this delay provides. They will be hoping that it gives more time for costs to come down and consumer attitudes to change.

“We await the further details that will show the true impact of today’s announcement. It is important that progress isn’t paused and momentum can be maintained. Either way, everyone is likely to have less trust in the Government’s Net Zero strategy and will think a lot harder before committing to any of its future strategies or roadmaps.”

Commenting on yesterday’s announcement of changes to the phase-out targets for sales of new petrol and diesel vehicles, Ian Plummer, Commercial Director of Auto Trader said: “The PM has left the industry and drivers high and dry by sacrificing the 2030 target on the altar of political advantage.

“According to our research only half of people could see how an EV could fit into their lifestyle as it is, suggesting major barriers to adoption. We should be positively addressing concerns over affordability and charging rather than planting seeds of doubt. The 2030 target itself in no way forced UK consumers to pay more as affordable petrol and diesel vehicles will be readily available in the used market for years to come, this announcement has only served to remove trust and confidence in the UK market.”

Paul Hollick, Chair of the Association of Fleet Professionals commented: “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.”

Charlie Cook, Founder & CEO of Rightcharge commented: “In 2023, the vast majority of electric vehicle buyers are doing so because they prefer the cars, not because they’re preparing for a ban in seven years’ time. 50% of new company cars are electric and overall, 1 in 5 cars sold in August were pure electric.

“However, it is very sad to see Rishi Sunak and the Conservative Government throw away the UK’s position as a global leader in EV policy. It will have some impact on EV sales to consumers in the late 2020s. Despite this though, the electric vehicle revolution will not be stopped by a weakening of policy and the UK will continue to see EV adoption accelerate through this decade.”

Lauren Pamma, Director for Transport Programmes at the Green Finance Institute said: “Policy stability and certainty around the 2030 ban has set the direction of travel, resulting in billions of public and private capital being mobilised for the EV transition.

“Rowing back on this commitment and extending the mandate risks damaging the UK’s international investment credibility and seeing investors leave for markets with more certainty. If we want to make the EV transition affordable and accessible, we need to create the appropriate policy and investment environment to ensure the supportive supply chain and enabling infrastructure, such as grid capacity, are in place.”