Could there be any greater vindication for the government’s policy of pushing us to buy electric vehicles than the crisis in Iran, which has sent prices of petrol and diesel soaring? That is what the government itself would like us to think, but it is not how the UK car industry sees it.
Never mind the pain being suffered at the pumps. The Chief Executive of the Society of Motor Manufacturers and Traders (SMMT), Mike Hawes, chose yesterday to warn that the industry is in ‘deep jeopardy’ thanks to the government’s proposal for banning new petrol and diesel cars from 2030 and all remaining hybrids from 2035. At an event in London set up to call for a rethink, he said he didn’t know of a single person in the industry who thinks that the targets on EV sales can be met. Decarbonisation, he warned, will simply mean deindustrialisation unless the targets are relaxed.
The UK car industry is already under severe pressure thanks to the government’s Zero Emission Vehicle (ZEV) mandate. This compels manufacturers to ensure that 33 per cent of the cars they sell this year are pure electric or face fines of £15,000 for each petrol or diesel vehicle by which they breach the target. Next year the target rises to 38 per cent, followed by 52 per cent in 2028, reaching 80 per cent in 2030.
The UK car industry is heading rapidly for the rocks
So far, manufacturers have only been able to avoid fines by exploiting some flexibility which has been built into the system (hybrid sales can help reduce their target for pure EVs), and also thanks to deep discounting of electric vehicles. This has given some people the false impression that the cost of producing electric cars is rapidly falling towards parity with petrol models; Hawes warned that, actually, the price of batteries is rising. In the case of Stellantis – the parent company of Vauxhall, Peugeot, Citroën and Fiat – it has managed to up its apparent sale of EVs through a tie-up with Chinese EV maker Leapmotor.
Even so, manufacturers are still falling well short of ZEV targets as car-buyers refuse to take the bait. In the first two months of this year, just 21.98 per cent of new registrations were pure electric – a little bit down on the 22.77 percent achieved in the same period of 2025. Buyers are being put off for the usual reasons: range anxiety, difficulty of recharging and the high cost of recharging if you do not have access to a parking spot outside your home. But there is now another disincentive to go electric: deep discounting of EVs is supercharging depreciation in the value of new vehicles.
Nor will EV drivers be celebrating their insulation from the Iran crisis for long. When the Ofgem price cap next comes up for renewal, it is a certainty that electricity prices will be rising, too – possibly even faster than petrol and diesel prices. The crisis is affecting the global supply of liquified natural gas (LNG) on which our electricity grid still heavily depends, not least to provide the backup when wind and solar energy cannot deliver the goods.
Ironically, given that a large part of the case for leaving the EU was the chance to escape Brussels-made legislation and so create a more business-friendly environment in the UK, British manufacturers would be in a better position now had Brexit never happened. Then, we would have been bound by EU targets which are much more flexible than those in Britain and which last year were revised to allow the sale of petrol and diesel models beyond 2035.
The UK car industry is heading rapidly for the rocks – but not for the reason which Remainers warned before the 2016 referendum, tariffs on car exports to the EU. The UK government, rather, is dooming the industry thanks to its decision to use Brexit freedoms in order to lumber the industry with especially stringent net zero targets.
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