Episode 136: Liz Allan and Colin Walker - ZEV Mandate Update: Government’s Latest Changes

Episode 136: Liz Allan and Colin Walker - ZEV Mandate Update: Government’s Latest Changes.

In this special, very pertinent and timely episode, Liz Allan welcomes back Colin Walker, Head of Transport at the Energy and Climate Intelligence Unit (ECIU), to unpack the latest government changes to the Zero-Emission Vehicle (ZEV) mandate. They discuss what the headlines mean, beyond the noise and confusion. Colin explains how the ZEV mandate is evolving, what manufacturers are lobbying for behind the scenes, and how these shifts could impact the EV market and our climate goals. Together, they explore why the government’s rationale for these changes may not stack up, the risks of short-term thinking in the auto industry, and the threat these changes pose to the UK’s EV leadership

Colin Walker Bio:
Colin Walker is the Head of Transport at the Energy and Climate Intelligence Unit (ECIU), a non-profit think tank dedicated to accelerating the UK’s transition to net zero. With a sharp eye on policy, industry trends, and decarbonisation pathways, Colin offers clear-headed analysis on the intersection of transport and climate strategy. He is a trusted voice in the EV and policy space, known for cutting through the jargon and helping audiences understand the real-world impact of complex decisions shaping our future.

 Quote of the Episode:
"The world is moving to EVs. Whether people like it or not, that is where we're going, and a failure to embrace EVs is a threat to our car industry."
— Colin Walker, ECIU 

Colin Walker Links:
ECIU Website: https://eciu.net
Twitter: https://x.com/colinwalker79
Bluesky: https://bsky.app/profile/colin-walker.bsky.social
LinkedIn: https://www.linkedin.com/in/colin-walker-1a55a084/

Episode Keywords:
ZEV mandate, Net zero, Electric vehicles, EV policy update, Decarbonisation, Sustainable transport

Transcript

Liz Allan  [00:00:02]:

Hi everyone. So I wanted to start by saying to you this is a very, kind of, we're recording this the week before it goes out because this is an important conversation, and I grabbed Colin today and messaged him and said, can you come on and talk about the ZEV mandate? So I've got Colin Walker, the head of transport in the Energy and Climate Intelligence Unit, with me. Is back for a second time. Bless him. Colin, thank you ever so much for enjoying Tom. Can you just pull that a second? Colin, thank you ever so much for joining me today. It's just brilliant to see you again.

Colin Walker [00:00:44]:

Pleasure. Thanks for having me on.

Liz Allan  [00:00:46]:

Now then.

Colin Walker [00:00:47]:

Let's talk about the ZEV mandate.

Liz Allan  [00:00:48]:

Yeah. Let's let's talk about it. So this week, the government have released, a number of changes to the ZEV mandate. And as I said to you, just before we started talking that my husband and I were talking just last night about the thread that you'd put on, I'm still calling it Twitter, sorry, on Twitter and I had a look at it today and I was like, I've got to get Colin on because I need to understand it. 

Everybody needs to understand it, and we need to know whether the headlines that are out in, you know, that come out in the press this week, are they accurate? Colin, can you just start off by talking a little bit about what the ZEV mandate is for those? I know there's going to be lots of people listening who do know about it but just what is it and what's it now turned into?

Colin Walker [00:01:39]:

Well, this could this could go on for a while, so I'll try to keep I'll try to keep it brief. The ZEV mandate, the zero-emission vehicle mandate, was a regulation introduced by the previous government, but it's continued under this government. It is essentially a series of targets for the number of EVs that a manufacturer has to sell, and it's by proportion. So the mandate came into effect last year, and in the first year of the mandate, 2024, manufacturers had to ensure that 22% of the cars that they sold were electric. And that's gone up to 28% this year, goes up to 33% next year. It goes up year on year until it gets to 80% in 2030, and then year on year and year until it gets to 100% in 2035.

Colin Walker [00:02:23]:

By 2035, manufacturers won't be able to sell anything other than zero-emission vehicles.

Liz Allan  [00:02:28]:

And that is new vehicles only, isn't it? 

Colin Walker [00:02:31]:

Yeah. New vehicles only. Very important. Lots of people in the press misrepresent that. Yeah. Second hand vehicles, 80% of us buy our cars on the second hand market. There were no restrictions on second hand petrol and diesel cars. People will be exchanging them and buying them on the secondhand market well into the twenty thirties, probably even the twenty forties.

Colin Walker [00:02:48]:

Yeah. So, yeah, it's just new vehicles. Pretty much a groundbreaking piece of regulation. Not many other places in the world have done it. California has done it, and a few other states follow them. The EU is trying to introduce its own version. China has some sales targets. But, you know, a lot of eyes were on The UK for doing this because it's really important because our single most emitting sector for CO2 is not the power that we how we generate our power.

Colin Walker [00:03:15]:

People always seem to assume it's transport. It's how we move people and things. It is the single biggest sector. I think about 24% of our CO2 emissions come from transport. And within that, well over half are cars. Yeah. Well over half are cars.

Colin Walker [00:03:29]:

So if we are to get to net zero, the most important thing we need to do is decarbonise our transport sector, in particular, our cars. So the ZEV mandate, you know, the government set this target to phase out the sale of all petrol and diesel cars by 2035. We can have another debate, which I'll leave for now, whether it's 2030, 2035, but 2035 is the one where no car can be sold with a petrol or diesel engine in it. The ZEV is effectively the regulation of how we will get to that point. Right. So yeah. And just one thing to say about it: it is working. I mean, the International Energy Agency recently came out and specifically singled out the said mandate as being responsible for what they called the surge in EV sales that The UK had experienced in 2024.

Colin Walker [00:04:17]:

They went up 24% in 2023. This means that the UK has overtaken Germany to become Europe's largest EV market. I think I saw somewhere that we're the third-largest EV market in the world, but I don't know that for sure. What I do know for sure is we are Europe's largest electric vehicle market, and the ZEV mandate has done that. And it is one last thing. The reason why it's done that is it it engenders competition. Manufacturers are competing with each other to sell EVs to hit their sales targets. And when you have that kind of competition, prices come down because people are cutting their prices to make their EVs more attractive to encourage you to buy an EV from them than their competitor.

Colin Walker [00:04:59]:

As a result, EV sales and prices have gone down. EV sales have gone up. Our concern about what's happening is that if you weaken the mandates, you weaken competition, and prices and sales will start going back up.

Liz Allan  [00:05:15]:

So we're kind of talking about this at the time when Donald Trump, I hate talking about him. I don't even like talking about that man's name, has introduced a variety of tariffs into a variety of countries, including the UK. I have read a number of things, Colin, about the fact that that kind of mandate, the changes to the mandate, are kind of hidden a little bit behind that. Mhmm. Do you agree?

Colin Walker [00:05:48]:

Yes. Yes. That's the government's line that weakening a mandate is one of the measures they are taking to help support our car industry deal with the impact of tariffs being placed. I think that's quite illogical. So mandates are so the tariffs are being placed, and, you know, The US is a pretty important market for the cars we export. I mean, 80% of the cars that we build in The UK get exported. Most go to the European Union, but second on the list is The US.

Colin Walker [00:06:21]:

I mean, just under 20% of the cars we export go to America. So this is a problem because, particularly for companies like JLR that sell a lot of, you know, generate an awful lot of revenue from the cars that they sell in The US, having a tariff rack on their vehicles will make them less popular and sales are likely to come down. So they're worried. I think my personal opinion is that the government was keen to be seen to do something and actually rushed forward its response to a consultation that had been open on the said mandate way before the Trump tariffs were announced. I mean, now I say it's logical because tariffs affect cars built in the UK that have exported to ports, specifically to America. The ZEV mandate is about cars sold in The UK. So, the two things are actually completely unrelated. You know, the ZEV mandate is solely about cars that we sell in The UK, most of which are imported, and the tariffs affect cars exported from The UK.

Colin Walker [00:07:31]:

So it's always felt a little disingenuous since this announcement was made to claim that playing around with the mandate will do anything to help car manufacturers deal with the problem that these tariffs present. Yeah.

Liz Allan  [00:08:02]:

So if we look back, and I know we’re going to talk about the differences now and this weakening of ZEV.

Liz Allan  [00:08:22]:

But in the run-up to it, there's been several OEMs. So, the vehicle manufacturers, am I right? Have they been lobbying the government, or have certain vehicle manufacturers been lobbying the government? Yeah. To change the mandate and put and weaken it, as it were. Now, I would assume, and you can tell me otherwise, whether I'm wrong, that the OEMs that are currently selling, you know, solely selling EVs like Polestar, that's not gonna it's not gonna bother them at all. They wanna keep selling, don't they? But there are several OEMs that have been doing this. Am I right? 

Colin Walker [00:09:09]:

Yeah, you are. I've learned that there's often a very big difference between what manufacturers say in public and what they tell politicians behind the scenes.

Liz Allan  [00:09:19]:

Okay.

Colin Walker [00:09:20]:

Often, there is evidence to suggest they contradict entirely themselves.

Liz Allan  [00:09:24]:

Oh, god.

Colin Walker [00:09:25]:

They'll say one thing publicly and the opposite. But you're right. So last year, the people most vociferous in their criticism of the ZEV mandate were the likes of Stellantis and Afford, who were struggling. However, others who were struggling, like Renault, didn't say that much. So there wasn't there wasn't the closest pattern. But, yes, there's been much lobbying on the government to weaken the mandate. Now, the argument is manufacturers are struggling to hit their sales targets, that this place that the mandate places an extra burden on them in these difficult times with lots of global competition, whereas China is managing the transition to building EVs; they've been constantly, constantly pushing this narrative that they're struggling and not hitting their targets. In reality, in 2024, the first year the mandate hit, the current industry as a whole met its obligations under the said mandate.

Colin Walker [00:10:27]:

And in 2025, the second year, they are on track to hit their obligations under the said mandate. And yet this narrative that the opposite is true, they're really struggling, has been all-pervasive. Most of our media reports it. It just repeats what the industry is telling them. Yes. We're really struggling. And it's clearly caught the government's imagination. And the government is helping them meet a mandate they're not really having any trouble meeting.

Liz Allan  [00:10:56]:

Oh, god.

Colin Walker [00:10:56]:

The weird thing about it is that you could understand these changes a bit more if it was clear that the current stew is falling really short. But it isn't. Now, some manufacturers are underperforming; some are overperforming. BMW and Mercedes are absolutely knocking it out of the park. Proof that legacy manufacturers can make the transition to building electric vehicles so that it's not too difficult. You know, BMW 2025, over 30% of the cars they sold in the UK in 2025 were electric vehicles. Phenomenal. Proof of it can be done.

Colin Walker [00:11:33]:

Stellantis, actually, will they finish? They even put a press release out in January, proudly announcing that they had achieved the Zed mandate regulation in 2024 despite having been incredibly critical of it for much of 2024. So, certain manufacturers are doing real, and there are others who are doing badly. Ford, terrible 2024. Probably down to the fact they managed to start 2024 with a total of one model of EV on sale. Yeah. The Mustang is not the most affordable one. You've now got things like the Explorer coming online and the Capri; it's a Mondeo. 

Colin Walker [00:12:12]:

Carry a light. It's exciting. I think the thing that will turn it around for many of these manufacturers is the small ones they produce. So even though Renault had a pretty poor 2024 in terms of EV sales, the Five, the Megane, and the Scenic, all three of them getting wave reviews, probably five will sell their hotcakes. They're probably gonna be good. I think the new electric Puma that Ford is releasing could be their game-changer, but let's wait and see. But, anyway, the point being is some manufacturers doing well, and some complain. But I also think it's true that even the manufacturers are doing well, they probably prefer selling petrol and diesel cars or hybrids.

Colin Walker [00:12:51]:

Those cars probably generate more profit per model because they are mature technologies. Electric is a new technology. The costs are often higher when you're adapting to a new technology, and you're waiting for the economies of scale to kick in and for the technology to mature. Now, my argument has always been that those are costs you need to bear in the short term to secure your long-term future because the world is moving in one direction when it comes to EV sales, and that's up. Globally, sales of EVs in 2024 went up 25%. This is where we are going. China has got this. China has taken a strategic long-term view and is busy carving out its position in which it will dominate EV sales.

Colin Walker [00:13:34]:

Now, I don't understand why we, in our country, can't adopt a similar approach. It feels very short-term. It feels like we need to maximise profit now. We can't afford to sell these guys. You're like, you won't be around in ten years to sell any cars whatsoever if you don't focus if you don't spend money in the short term to secure your long-term future and enjoy a slice of the market that you have carved out that you can enjoy profitability from once the technology has matured and those economies and scales have kicked in. So, yeah, that's where we are with the manufacturers. So they have it's just been a constant narrative that we've always been trying to push back against with others in the sector that we're struggling with. We're really struggling.

Colin Walker [00:14:13]:

You need to help us, and you need to do one or two things. You either need to introduce more incentives to encourage more consumers to buy these cars or weaken the mandate. It seems like they have been successful in achieving that second outcome.

Liz Allan  [00:14:27]:

So who benefits from this, then? If we look at the if look, we look at what you're just saying, the fact that a number of the OEMs have been able to say, look at us. Aren't we brilliant? We've done the first year, you know? Are they going to? Yeah, because a lot of this has been coming on for years, hasn't it? So their targets, you can't these big OEMs are are like moving the Titanic, aren't they? They have to build all of this into, like, is it about ten year six to ten-year cycles or something like that. Now, surely their profit model must have something you know; they can't just swing from one thing to another. Maybe I'm wrong.

Colin Walker [00:15:19]:

No. I think it's an entirely reasonable point. And there's a part of me that thinks, will these changes result in a significant downturn in EV sales? Presumably, a lot of these manufacturers have already planned out product launches and sales for 2026, 2027, and 2028 as you say, six, eight, ten years ago. So, will the ability suddenly massively decrease the number of VV sales and ramp up the number of hybrids they sell? Is that gonna bear out in reality? Because you can't just switch things on a dime and go, oh, well, just here's we'll just produce this new Feb and sell that. So, there is a dynamic that might limit the impact of these changes on the mandate. So It's hard to say for sure.

Liz Allan  [00:16:07]:

So if we go into these, the sort of the if we talk about your thread and what you were putting, you know, and I loved at the end you went, sorry. It's so long. But I

Colin Walker [00:16:17]:

Think it was my longest yet.

Liz Allan  [00:16:20]:

Can you just kinda break it down? I know you said to me, didn't you? You're still trying to get into the details. But if there's anybody who knows all of this stuff, it's gonna be you so far. You see, we're only kinda partway through the week, aren't we? We're only on Wednesday, and it only got the news came out on Monday. So Yeah.

Colin Walker [00:16:42]:

So you told me to answer the main changes?

Liz Allan  [00:16:44]:

Yeah. Yeah. If you can.

Colin Walker [00:16:46]:

So I will. I will. There are others who know the intricacies of some of these policy changes better than I do.

Liz Allan  [00:16:53]:

Okay.

Colin Walker [00:16:54]:

So, like, the guys at New Automotive, if you haven't had them on your podcast already, do. They really know the data. They see the details. Ben Nelms, he's excellent. So, if you really wanna get into the details here, he'd be a good person to speak to in detail, but I hope I can give you a bit of a top line. But as I say, I also think it's true of them. We're still trying to figure out what some of these changes will mean in practice.

Colin Walker [00:17:15]:

My initial response when I saw them was, they're not great, they're not awful, but then I looked at it a bit more because we saw a main press release, and then this technical press release came out that went into more detail. And when I looked at that, I was like, oh, no. This isn't pretend this isn't great. So, regarding the changes that they are making, I'll come back to what I think their impact will be. I'll list them out at the moment. Yes. Yeah. Firstly, it was always going to be the case that the sale of pure petrol and diesel cars would end in 2030, but that you would be able to sell hybrids with the ability to do a sufficient amount of electric-only driving.

Colin Walker [00:17:56]:

What we mean is that there are plug-in hybrids

Liz Allan  [00:17:58]:

Yeah.

Colin Walker [00:17:58]:

From 2030 to 2035. You're talking about a relatively small number of cars actually because, by 2030, '80 per cent of the cars you sell have to be zero emission. That means that in 2030, the remaining 20% of the cars you sell would have to be PHEVs. And then by 2029, sorry. 2035, 96% of the cars you sell are electric. So you're talking about the remaining 4% of cars will be fabs. This new change will allow standard hybrid electric vehicles and fabs to be sold. So hybrids that you can't plug into a wall, hybrids that get all the energy for their electric drivetrain from burning petrol or diesel in an internal combustion engine.

Colin Walker [00:18:41]:

I don't think that specific regulation is as terrible as it sounds. I'll explain why now. People drive, and most people drive plug-in hybrids like standard hybrids. The evidence is that many people don't bother plugging them in. So, the European Commission analysed data from something like 600,000 cars and where found that you know, petrol cars and diesel cars typically burn 20% more fuel than their manufacturers claim. That's no surprise. We know what it's like. There are claimed MPGs, and they always seem a bit unrealistic.

Colin Walker [00:19:12]:

It's true of the EV ranges as well. Right? So, the one exception to that was plug-in hybrids. Because people aren't plugging them in, plugging in hybrids burn 350% more fuel than their manufacturers claim. There is an assumption about the amount of driving FEVs will do using energy taken from a plug in the wall that is not playing out in practice. So, FEVs don't deliver much more than standard hybrids in terms of c o two reductions or, you know, money savings to people. So that was always a bit like that change. It was always something I never personally felt like we need to die on a hill over because it's like, I don't think it will make a huge difference. So that's one significant change.

Colin Walker [00:20:03]:

There will be some exceptions for small-volume manufacturers. So what we're talking about is people who produce the zed mandate will not apply. So they won't have to worry, but they will, so I'll start again. They will be able to continue selling pure petrol and diesel cars right down until 2035. So they won't have to hybridise their fleets.

Liz Allan  [00:20:23]:

And that and that would cut that would be relating to which small OEMs that we're talking

Colin Walker [00:20:29]:

About? Maclarens.

Liz Allan  [00:20:31]:

Yeah.

Colin Walker [00:20:32]:

You know? If I look, yeah. Bentleys, Maclarens. Anyone else? Who else? Yeah. Probably Aston Martin. Probably affected it. So, on the one hand, you're like, these are big polluting vehicles. But when you're looking at absolute numbers, it's a minimal number of cars.

Liz Allan  [00:20:51]:

Okay. Okay.

Colin Walker [00:20:52]:

So, I don't think that change is causing any consternation across the sector.

Liz Allan  [00:20:58]:

Mhmm.

Colin Walker [00:21:00]:

Whatever changes. They were decreasing the fines, so if you fail to meet the mandate, you earn credit by selling an EV for every credit you are short in hitting the zed mandate target. Before, you'd get fined £15,000, but now it's gone down to, so yeah, it's gone down to £12,000.

Liz Allan  [00:21:23]:

Okay.

Colin Walker [00:21:24]:

But then the significant changes are these. It's actually the changes to all the flexibilities in the regulation. Many flexibilities will go into the regulation to appease the manufacturers. Now, these flexibilities mean that fines are very much a thing of last resort. There's an awful underperforming manufacturer; there's an awful lot of things they can do to try to comply with the mandate before they have to contemplate paying fines to the government. In fact, in 2024, transport environment, that's a fascinating analysis that found that not a single manufacturer in 2024 would have to pay a fine. All the flexibilities available in the regulation mean that even the worst-performing manufacturers like Suzuki, who did not sell a single EV in 2024, would not have to pay a fine.

Liz Allan  [00:22:10]:

Oh, god.

Colin Walker [00:22:10]:

Because they can borrow credits from future allowances and buy credits from rival manufacturers. And because the overperforming manufacturers had generated a more significant excess of credits than there was a shortfall of credits amongst the underperforming manufacturers, that's a buyer's market. So the price would probably be significantly less than the £15,000 fine. So that, again, that change in the fine thing isn't a big deal. The ones that I think are not. Before we get to the ones that I feel are really controversial, manufacturers will now be able to transfer credits between the cars they have mandated and the vans they have mandated.

Liz Allan  [00:22:51]:

Okay.

Colin Walker [00:22:53]:

So if you are a manufacturer, that is, I mean, I'm not sure if this is necessarily true of Stellantis, but we know Stellantis make a lot of vans. Say Stellantis are overperforming when it comes to their cars, they have mandate targets, and they develop a build-up of an excess of credits. They will be able to transfer those credits over to help them hit their van targets if they are underperforming their van targets. Again, that's a bit like I don't think that's that. We saw that one coming, and I think there's some logic to it. I mean, it's not one-for-one. For example, if you have one excess car credit, that's only worth 0.4 van credits. So you'd need two and a half excess car credits to turn that into one van credit.

Colin Walker [00:23:40]:

Conversely, the other way is that one van credit is worth two car credits. So, if you're one van credit above your level, you can transfer that over, and that will get you two new car credits to help you achieve your level if you're underperforming.

Liz Allan  [00:23:56]:

Oh my god. Okay.

Colin Walker [00:23:58]:

So yeah. So I know it's going a bit techie, but that gives

Liz Allan  [00:24:01]:

You sense. No. No. No.

Colin Walker [00:24:03]:

But then, those levels kind of make sense because vans are typically much more polluting than a standard car. So yeah, it's again, again, that change hasn't probably caused people too many concerns. It's the changes to the flexibilities that I mentioned before. There were two big flexibilities that already existed in the regulation. So, nothing new is being introduced, but the existing flexibilities are being extended. One of them is borrowing.

Colin Walker [00:24:34]:

If you are struggling to hit your zed mandate target in any given year between 2024 and 2026, you can borrow credits from future years and then pay them back. And there's a bit of interest, like, three and a half per cent interest on any borrowing you did. So people who are struggling like Suzuki, or Renault or JLR would be able to go, right, we'll buy for good credits, and we're confident we're gonna massively ramp up EV sales in a couple of years. We'll pay all these credits back. That was one of the flexibilities. And the other one is quite hard to explain to Sydney because I've tried time and time again to explain this on Twitter and to journalists, and it never really lands. This year, 28% of your car sales have to be EVs. But here's the weird thing.

Colin Walker [00:25:24]:

You can earn credits to hit your EV sales target. It's not sorry. I'll start again. It is not just the sale of EVs that can earn you the credits to hit your EV sales target.

Liz Allan  [00:25:35]:

Okay.

Colin Walker [00:25:36]:

You can also earn credits if you reduce the c o two emissions of your petrol and diesel fleet. So there's a separate regulation that awards people credits if they significantly bring down the average c o two emissions of the petrol and the diesel cars they sell. This flexibility allows you to transfer the credits you earn from doing that towards achieving your Zed mandate target. This has resulted in New Automotive doing some fascinating analysis in which they have found that each manufacturer's individual reels their mandate target. And what that means is that transfer mechanism, taking into account the extent by which different manufacturers are successfully lowering the CO2 emission petrol thing, petrol and diesel sales they do. We estimate that they would only need to sell this many EVs that, combined with those extra credits, will help them achieve their 28% target. So they worked out that. What was it for? I think this year's headline target for EV sales is 28%. However, that ability to earn credits from selling, you know, from the CO two transfer means the currency as a whole only needs to hit around 23% EV sales to comply with the mandate.

Liz Allan  [00:26:59]:

Oh my god. So how right? So I get what you're saying, but are we talking about the OEMs just making or being able to prove that their current petrol and diesel vehicles are more efficient and economical, etcetera, etcetera, and their emissions are lower?

Colin Walker [00:27:24]:

Something like that. But that is a classic example of something new automotive knows much better than I know. Yeah. So yeah. Like, it is it is a bit strange. They're setting baselines for the overall fleet and all this stuff. It is a bit complex, but there is enough out there to allow us to work out how many EVs a manufacturer has to sell to hit the mandate, knowing that they will get extra credits from this CO2. Now, for example, Toyota, I wish I had the figures in front of me, but last year, the target, the nominal target was 22% EV sales.

Colin Walker [00:28:03]:

I think they had to get close to only half that. I swear it was only 14% of EV sales because they built so many hybrids. And because the hybrids have much lower CO2 emissions than a standard petrol car, they brought the fleet down a lot, which gives them an awful lot of extra credits they can carry over, meaning they have to sell fewer EVs. So that flexibility, those are the two flexibilities, borrowing one and these non-serve credits, we call them.

Liz Allan  [00:28:31]:

Mhmm.

Colin Walker [00:28:32]:

They're being extended. Before, those flexibilities were only gonna exist in the first three years of the mandate, 2024, 2025, 2026, and then they would stop that they're being extended to 2029.

Liz Allan  [00:28:45]:

Oh my god.

Colin Walker [00:28:47]:

And also so, firstly, you can now borrow credits for most of a decade, and you can carry on transferring non-EV credits earned from the petrol and diesel fleet. That can help can continue to help manufacturers out way up until 2029. So that means manufacturers theoretically will have to sell fewer EVs throughout the decade to comply with the Z mandate, which means fewer EVs on the road, which means more CO2 being emitted, which means more people being stuck driving dirtier and more expensive to run petrol cars for longer. That isn't good. Yeah. The reason it's worse is that there's, again, I'll try to explain this succinctly, and I'm not sure I've done a particularly great job so far. Is there a cap on how many non-ZEV credits you can use to hit your EV target?

Liz Allan  [00:29:44]:

Right.

Colin Walker [00:29:44]:

So, in 2025, hang on. I will make sure I get this right because I need it in front of me. Alright. Yes. In 2025, only 45 under the previous arrangements, only 45% of your EV sales target could be made up with credits earned from lowering the two emissions of your petrol and diesel cars.

Liz Allan  [00:30:08]:

Mhmm.

Colin Walker [00:30:09]:

That cap's been raised to 90%. What? So yeah. So before, less than half of your EV sales target could be made up, but through credits earned through selling petrol and diesel cars with low CO2 emissions, now it's 90%. So you can see now, and that will continue. So that goes down each year. But, for example, in 2026, the cap would be lowered to 25%. Next year, it will now be 80%. Then, in 2027, when the flexibility was and the previous arrangement was going to end, now 70% of your credits could be earned through non-EV sales.

Colin Walker [00:30:51]:

So you can now see that there's gonna be a pretty strong incentive for car manufacturers to carry on pushing, selling particularly hybrids rather than EVs to hit them. This is a perverse thing. We have changed the mandate in a manner that shifts the incentive away from selling EVs to more emphasis on selling hybrid vehicles. So, it slightly defies the point of the said mandate, which is supposed to increase sales of zero-emission vehicles. And now we're just gonna be selling lots of still, you know, emitting vehicles. So this will almost certainly result, and this is the thing we're trying to get our heads around. We're trying to quantify exactly what this means. There is. I can send you a link; maybe you can drop it or share it with me.

Liz Allan  [00:31:42]:

I'll share

Colin Walker [00:31:43]:

It is with you. Show notes. Yeah. Where new automotive companies have calculated some stats about what this means. But I think, for example, where is it? I can give you a sense of how bad it could get. Their calculations suggested that, whereas before, looking at 2029, taking under all the original flexibilities, the minimum compliance, you had to hit 66 EV sales in 2029. With all these extensions and flexibility, the car industry could theoretically only need to hit 33% EV sales to comply with the market. So, theoretically, it might not happen like this, but they could sell half the number of EVs they initially needed in 2029 to comply, which is terrible.

Colin Walker [00:32:38]:

This has a number of knock-on effects. You know, I've mentioned it will just keep people stuck driving more expensive cars, petrol cars, for longer. It will massively slow this growth in the secondhand market, which is where most of us buy our cars, and most of us will be able to afford to make the transition to electric driving.

Liz Allan  [00:32:56]:

Yeah.

Colin Walker [00:32:58]:

The charging industry will be having absolute kittens about this. 

Liz Allan  [00:33:03]:

Oh, I can imagine.

Colin Walker [00:33:04]:

Because an awful lot of the rollout of our charging infrastructure is dependent on private capital, investors, like the holy grail for investors, know what demand is likely to be. The great thing about the mandate is that it gave investors working and supporting charging infrastructure companies a very clear sense of what future demand for their services and infrastructure is likely to be. Right? Brilliant. Okay. In this year, this number of EVs will be sold. And by this year, we could say pretty confidently that this is how many EVs will be on the road. These flexibilities create huge uncertainty now.

Colin Walker [00:33:42]:

Like people, it's because we have not figured it out as a sector yet. What we cannot say from these things is what this means for EV sales. Now, people in the charging industry talk about how they have £6,000,000,000 ready to invest in our charging infrastructure, which is something we need. Our charging infrastructure is not perfect. We need to improve it. It is perceptions of bad charging that are definitely a barrier to people making their move to EVs. But also £6,,000,000,000 that would go into our economy. And we have a stagnating economy and a government making economic growth. It's kind of like a big mantra.

Colin Walker [00:34:16]:

So, you could argue that these moves are actually quite anti-growth. They can hold back investment, and it's not just charging infrastructure like people looking to invest it. You know, EVs will be a big electricity consumer in the future. So, are people looking to build wind farms and solar farms confident that there'll be enough demand for the solar farms they want to build? Will this hold people back from investing in that generating infrastructure? So, it causes a lot of uncertainty there. Another considerable uncertainty I think it causes, which I'm sure the industry would not agree with me on. As I mentioned before, the global world is moving to EVs. Whether people like it or not, that is where we're going. Efforts to slow the pace of that transition may be successful, but they won't put it off.

Colin Walker [00:35:03]:

That's where we're going. EVs are the future. All of our major export markets are moving to EVs. If we get stuck building petrol and diesel cars, in a few years time, we'll suddenly discover that the market for those cars has disappeared. That is a recipe for factory closers and hundreds of thousands of job losses. The future of our car industry, you know, back in the seventies, we did this before. We didn't adapt. We didn't move forward.

Colin Walker [00:35:27]:

Our car industry almost almost lost it. It is rusted. It was a disaster. It has managed to recover, but we risk doing the same thing again if we don't invest in building the cars of tomorrow because that is how we will secure its future. And one of the things that government can do to support the car industry in making that move is providing a stable and ambitious regulatory environment. And that's exactly what the said mandate was. And I'm not sure if it is anymore. No.

Colin Walker [00:35:56]:

Because the government is doing this, they have played around. They started playing around the regulation. It's only been in effect for sixteen months. And they have repeated the kind of flip-flopping we saw under Rishi Sunak when he started changing phase-out dates, which, you know, auto trader flag is undermining consumer confidence. It held people back from making a transition to EVs. Yeah. So we're just repeating this and not providing the car industry with the stable regulatory environment they need as part of their efforts, as part of a package of efforts to help them make the shift to electric driving. We commissioned a report from CBI Economics to test this hypothesis because I've always felt an awful lot of people have gone; EVs are a threat to our car industry, and I've always felt that was counterintuitive.

Colin Walker [00:36:42]:

I was like, it's quite the opposite. A failure to embrace EVs is a threat to our car industry, but I've got people who knew what they were talking about, so I'm going to explore this. So we went to the CBI, and they found that our car industry generates about £47,000,000,000 in economic output and supports 550,000 full-time equivalent jobs, quite a lot, and often in specific places like Ellesmere Port or South Derbyshire or Sunderland. And they found that if we make a rapid, really embrace it, rapid transition to EVs, economic output could increase by 16 billion. We could actually employ an extra 67,000 people. Conversely, the worst-case scenario makes no improvements in the proportion of cars that we build their EVs. Our car and just our economic output, the economic output of the car industry could fall by 73% or 34,000,000,000, and over 400,000 jobs could be lost.

Liz Allan  [00:37:36]:

Oh, good god.

Colin Walker [00:37:36]:

So what's that? Three-quarters of the workforce? And and one of the things they said in the report, one of the things they said that governments could do to help secure that positive outcome rather than negative outcome is provide a stable regulatory environment through measures like the said mandate. And these changes undermine that. So yeah. That, in a nutshell, is all my concerns.

Liz Allan  [00:38:03]:

Well, that that's plenty. That's plenty. I suppose I was thinking in some ways, and I know you've not got a lot of time left now, but it's a bit like lobbying's gone wrong. The lobbying from the OEMs have, you know, they might have are they gonna be rubbing their hands together, or are they gonna be looking and thinking, oh my god. What are they?

Colin Walker [00:38:26]:

It's not gone far enough, but they'll always want more. I'm sure they would rather the Zed Monday wasn't there at all, but the SMMT welcomed it as a step in the right direction.

Liz Allan  [00:38:37]:

Yeah. I was gonna say that this is the who are they? You know? Are they's, are they the ones who aren't haven't been putting the efforts effort in the first place? You know? And I and I Possibly.

Colin Walker [00:38:53]:

I think the ones who have a big influence over government policy are obviously the ones who employ many people here. Toyota is in South Derbyshire, Stellantis is in Ellesmere Port, and Nissan is in Sunderland. They're obviously gonna have an awful lot of influence because they employ a lot of people and a lot of people in areas that would be devastated by their departure. But when you talk about lobbying, don't worry. I can push on a little bit past five. The thing is, with these changes, we can also see a huge cliff edge approaching us. So, these changes to the flexibilities will all be extended to 2029. And after 2029, they stop.

Colin Walker [00:39:33]:

And that means that suddenly, all these flexibilities that allow car manufacturers to reduce the proportion of EVs significantly is a wood scope. So I think, who is it? I think they pointed out that I believe it is in 2029. As many firms might be in 2029, firms might be able to get away with producing as low as 33% EVs to comply with the mandate, where the original target is headline target is 66%. These flexibilities mean they could be hit as low as 33% to comply. In 2030, that ends. In 2030, the target will be 80%, and there will be no flexibility to help you if you struggle to meet 80%. Now, going from 33% sales in 2029 to 80% EV sales in 2030 is

Liz Allan  [00:40:25]:

Madness.

Colin Walker [00:40:26]:

Implausible. Yeah. And you know what's going to happen is that we'll get to that point, and we'll have built all these problems with a backup and backup. The can is just being kicked down the road, and then boom. Carmen should go. We don't have a chance in hell of making that jump. You need to help us. We need more flexibilities. We need to weaken the mandate further.

Colin Walker [00:40:48]:

So by not standing firm now, at a time when the car manufacturers are actually hitting, you know, broadly getting there with the mandate, they create a situation where they'll get lobbied again, and this time, the car industry will be quite justifiably going, we are not it's going to hit this. And so the mandate could get weakened further. Also, 2029 is a general election year. Yeah. So, this could well become a real political hot potato.

Liz Allan  [00:41:17]:

Millstone as well. Yeah. I mean, in some ways, the common sense thing would be for the manufacturers who are on target to stick with the old ways. Do you know what I mean? Just go with what it said before, and then, you know, because if you're building it up over the years and were heading in that direction, you're doing a decent job. Because, as you said, it's hard for these big behemoth organisations to move around. So if that's what they were expecting, then

Colin Walker [00:41:50]:

Well, I heard they changed. As I mentioned, BMW is doing well, and they did really well last year. They didn't just meet their ZEV mandate targets. They beat them. And I'm sure I heard someone say they had spoken to someone from BMW; why are you still pushing EV sales when you've already hit it? Because we it's about market share. We don't wanna say that we want to carve out as much market share as possible because that puts us in a stronger position against our competitors. So you, that's one of, hopefully, the mitigating factors. Manufacturers have already got the kind of product lineup, and everything has already been done. They can't just change it like that, but they might look at this as an opportunity to put more space between them and their flagging competitors.

Colin Walker [00:42:29]:

And come 2030, they'll be like, "Well, I might be able to hoover up your space."

Liz Allan  [00:42:35]:

And it's a bit like, I suppose you had the 2035 pushback, you know, the twenty-twenty-thirty to 2035 pushback under Rishi Sunak, didn't you? That didn't do anything to those manufacturers because it was, to me, more public confidence.

Colin Walker [00:42:56]:

Exactly that. The actual change was very minimal. It was a mountain over molehill stuff. Mhmm. It was always going to be the case that the sale of pure petrol and diesel cars was gonna end in 2030, but hybrids, probably plug-in hybrids, would be allowed for another five years, twenty-thirty-five, at which point the sale of any car with a combustion engine in would end. All Wishy Sunak did was say, I'm gonna get rid of that hybrid bit. So, the cars you could continue selling are petrol and diesel cars, pure petrol and diesel cars, from 2030 to 2035. But by 2030, under the original mandate, 8080% of vehicles are being sold to EVs, and you are talking about 20% of cars on sale.

Colin Walker [00:43:36]:

Do they have a battery in or not? And given I'm quite sceptical about the meaningful impact that hybrids can have in terms of reducing CO2, they're much they really offer marginal improvements over petrol-diesel cars when it comes to fuel efficiency compared to EVs. It always felt like a bit of a mountain out of a Molehill kind of thing. Our concern was that, as you say, it just undermined and confused consumers. They told them they had more time than they had. It took up the urgency, and it was just it just felt like it was gonna just slow EV uptake. So when labour came into power, they just returned to the phase updates initially articulated by the conservative party before Sunak did its flip-flopping. But now I have to say, I think the Labour Party in government are guilty of flip-flopping and creating regulatory uncertainty through these changes. And, yeah, the car industry might be happy with what's happened.

Colin Walker [00:44:35]:

Although a lot of voices have always been there, stepping in the right direction, it's not enough. But the charging industry will not be happy with this. Yeah, green groups will not be happy with this because it just keeps dirty, polluting petrol and diesel cars on the road for longer. Yeah, and so it's the transition to electric vehicles, which is a bad thing.

Liz Allan  [00:44:56]:

So, let's go ahead and ask you one final question. What do you think? If you could give the government one piece of advice, what would that be?

Colin Walker [00:45:11]:

It's hard now because you feel like this is this is done. It's kind of like this: they did a consultation on the changes that need to be made. They're always gonna come out with their response to the consultation. They've just brought forward that response to pitch it as an example of them doing something to help our car industry. I would say, seriously, like, you've introduced some changes. They're fine. They're not that impactful, but the extension of this ability massively improves, increasing the ability to hit your ZEV Mandate targets through petrol and diesel car sales is the biggest problem. I think that's the thing that's gonna really slow EV sales.

Colin Walker [00:45:57]:

It's gonna slow the growth of the secondhand market. It's gonna keep people stuck driving more expensive petrol cars amid a cost of living crisis. It's gonna incentivise manufacturers to carry on producing hybrids when they should be focused on making the transition to building EVs. That is what's critical for securing their future. And this feels like the protestations of short-term pain by the manufacturers probably needed to be not ignored but qualified a little. The government talks about producing an industrial strategy to help manufacturing and our car industry. Well, that needs to be looked into in the long game, And these changes undermine, particularly, those flexibilities. I think we can lower the chances of the UK having a successful, thriving car industry in ten or fifteen years.

Colin Walker [00:46:50]:

So, I'd love them to row back on that. If they row back on anything, it's the extension of these flexibilities. Yeah, that would be.

Liz Allan  [00:46:57]:

Because we don't want a 2029 lobbying centre during, as you say, political probably political uncertainty by then. I don't know. 

Colin Walker [00:47:11]:

Well, you can see that reform leading in the polls or their thereabouts very much making their opposition to net zero a kind of the centrepiece of their political strategy. Conservatives seem to think more about how they can win reform voters back rather than winning Labour and Lib Dem voters back. That means we've already seen Badenoch taking a more hostile approach to net zero and saying some ill-informed things about EVs and potholes

Liz Allan  [00:47:41]:

Oh, I saw.

Colin Walker [00:47:42]:

Yesterday. Yeah. So, you know, you can see it going that way. You can see Net Zero will become more contentious and become more and more of a cultural issue. And I think EVs will become increasingly a lightning word for that. And so I think the Labour government have potentially created quite a political problem for And Lightning, assuming that they fight. Yes. Quite a lightning world for their own back.

Colin Walker [00:48:08]:

I assume that they will not call an election until 2029.

Liz Allan  [00:48:14]:

It's going to be a “watch this space”. I personally just hope that the OEMs and the manufacturers who are, like you say, leading the way already stick to that.

Colin Walker [00:48:27]:

Crack on.

Liz Allan  [00:48:27]:

Because they're gonna, it's just gonna drive a wedge between, you know, that you're gonna see the ones that are going, right, China's doing this. So we need to kind of right. We've gotta follow them because we can see what they're doing. And actually, whether the government

Colin Walker [00:48:41]:

Head in the sand.

Liz Allan  [00:48:43]:

Yep. Absolutely. So let them carry on putting their heads in the sand, those that want to do it. And then, when we get to the point where more people, more OEMs, more organisations kinda recognise, let's stick to what we'd agreed in the first place. Yeah. Absolutely. You know, let's go for it. But yeah.

Liz Allan  [00:49:04]:

I just wanted you to join me today to talk through some of this because it feels like this whole gloopy soup, you know, as one of those thick potato soups you have this winter. It just felt like with big lumps in it, and I and I know we're not, you know, we've kind of not got to the bottom of every single bit.

Colin Walker [00:49:29]:

Sorry. It's hard to talk it through concisely.

Liz Allan  [00:49:33]:

Don't say sorry.

Colin Walker [00:49:34]:

Still figuring it out. So I know it could be a bit wordy at times. 

Liz Allan  [00:49:38]:

But no, Colin, honestly. Everybody, I'm sure all of you watching and listening will recognise this man's knowledge, and this is why.

Colin Walker [00:49:47]:

Thank you.

Liz Allan  [00:49:47]:

I jumped on WhatsApp, you know, to get you on here. Actually, just from seeing that breakdown of the thread that you had, it just, you know, you do learn so much. And we'll see anything. I always say this. Anything open to interpretation will be interpreted in a specific way. So, over time, we will probably see all sorts of things coming out of that. But now, you know, you've given me, and I'm sure everybody watching and listening, that bit of clarity of thought and understanding. So I just really, really appreciate your time. Thank you ever so much.

Liz Allan  [00:50:30]:

I've said to you, I'm having an everybody. When you're listening to this, it is coming out next week. I will have had an operation on my Achilles. So I'm going to be on crutches for, like, a fortnight. So I just said to Colin, can you just join me quickly? So thank you, Colin. Absolutely brilliant. I really, really appreciate your time.

Colin Walker [00:50:50]:

My pleasure. Thanks for having me on.

Liz Allan  [00:50:53]:

So everybody, seriously, for those of you who wanted to know about ZEV, I'm sure you've, you know, you've got that level of clarity. Please share it. And we'll be putting posts on LinkedIn and etc, etc. So please share it with as many people as possible and help everybody understand ZEV better. And again, for you all watching and listening, I wanna say thank you, and I'll be hopping out next week. See you later. Bye.