Flexibilities introduced earlier this year to the UK Government’s ZEV mandate could prompt a big increase in plug-in hybrid sales at the expense of pure EVs, it has been said.
Ben Nelmes, executive director of transport research organisation New Automotive, said that in a ‘worst-case’ scenario, carmakers could effectively halve the number of zero-emission vehicles they needed to sell under the ZEV mandate in five years’ time by shifting to PHEVs.
Changes to the ZEV mandate announced in April include reduced fines for non-compliance, and an allowance for credits to be transferred between car and van sales.
However, Nelmes explained that he thought the most significant change was the extension of a flexibility allowing a carmaker to reduce its ZEV sales target by improving the average CO2 rating of its petrol, diesel, and hybrid car sales.
Speaking at the BVRLA’s Fleets in Charge conference, Nelmes said: “The crucial change here is that the limit on the use of this flexibility has been almost entirely abolished over the next five years.
“So, what would happen if every carmaker made maximum use of this new flexibility? To do this, they would have to dramatically improve the fuel economy of their non-ZEV car sales, and that would happen by almost entirely selling plug-in hybrids.
“And if they did, the headline ZEV mandate targets would be effectively, and what would be dramatically, reduced, and we’d see an average reduction of 28 percentage points of the targets in each year, and so a target that should be 66% [ZEV sales] in 2029 would in practice fall to just 33%.”
Although Nelmes said this exact scenario was unlikely, he did explore how different potential strategies from carmakers could affect the number of EVs sold over the next five years.
He said that if PHEV sales continued at the current rate, the number of EVs sold could fall from an expected 4.2 million to 3.7 million, but if carmakers were more aggressive, taking PHEVs to 40% of their output, this could see the number of full EVs sold reduced by one million.
Nelmes added that manufacturers selling PHEVs had benefited from a UK Government decision on emissions standards.
He said: “[CO2] savings would have been significantly reduced if the government had adopted the EU’s more realistic methodology for calculating PHEV emissions.
“However, the UK has decided to delay that change for the purposes of the ZEV mandate until 2030. And that decision keeps the door open for PHEVs to be used to significantly weaken the ZEV mandate’s push for electric vehicles.”
Nelmes said that how the market developed over the next five years would ultimately depend on manufacturer strategies.
He said: “Is it worth their while to aggressively push plug-in hybrids just to reduce their ZEV targets by a few percentage points? That will depend on the margins they’re making on the different powertrains. And other factors like the changes of the company car tax regime, and Vehicle Excise Duty, will of course play a role as well, and they have become far less favourable towards plug in hybrids relative to EVs.
“Ultimately, only time will tell, but I encourage all of you to consider this question carefully, because … it’s going to impact the number of battery electric cars that are being pushed into the market, and that has a really important knock-on implication for residual values.”
