The Government must stand firm against car industry lobbying and protect the Zero Emission Vehicle (ZEV) mandate or risk missing legal CO2 targets and locking drivers into expensive fossil fuel bills, the UK’s independent climate watchdog has warned.

In its annual progress report to Parliament, the Climate Change Committee (CCC) stated that the vehicle sales targets are working exactly as intended by driving down prices and increasing manufacturing competition.

The committee’s newly published report reveals that a surge in local manufacturing competition and falling battery costs pushed the average electric car price premium down to 16% last year, down from 24%.

This rapid price drop means several electric car segments have already reached cost parity with petrol equivalents, giving buyers an immediate route to lower running costs.

However, the CCC warns that any attempt by ministers to weaken these targets to placate car manufacturers would “severely undermine” the UK’s legal commitments under the Paris Climate Agreement.

Failing to support the policy will leave millions of motorists hit by the financial burden of high and volatile fossil fuel prices, the report details.

According to the report, slow electrification is raising UK household energy bills and risking future climate targets, despite progress in renewables and electric vehicle adoption. While 2025 saw a 1.8% drop in emissions, a significant slowdown in heat pump installations leaves households exposed to high fossil fuel costs.

To reverse this trend, the Government must implement an ambitious national electrification plan. This requires continued progress towards low-carbon electricity and an accelerated rollout of electric vehicles, heat pumps and industrial electrification.

The report spotlights that surface transport remains the UK’s highest emitting sector, and says that while EV sales are continuing to grow – with nearly one in four new car sales now electric – “an acceleration is needed”.

It continues: “To flourish, the UK car industry needs to continue its pivot to the technologies of the 21st century. This requires the Government to stand firm behind the ZEV mandate and remove barriers to EV adoption. Crucial to this is increasing access to affordable charging, allowing the one-third of homes without access to off-street parking to benefit from lower running costs. It is also important to remove regulatory barriers and minimise any ‘hassle factor’ to consumers from the planned introduction of electric vehicle excise duty.”

The report says that despite some weakening of incentives in 2025, the ZEV mandate continues to be effective at increasing the choice and affordability of electric cars on the market, without any manufacturer penalties being incurred.

Despite widescale lobbying from the UK vehicle sector, trade union Unite and even MPs on the Business and Trade Committee (BTC), the CCC says it’s “essential” that this year’s review of the mandate does not lead to further concessions.

The climate advisers warn that doing so would severely undermine prospects of achieving the UK’s 2030 Nationally Determined Contribution (NDC) – the UK’s legally binding international pledge under the Paris Climate Agreement to reduce its economy-wide greenhouse gas emissions by at least 68% compared to 1990 levels. This would exacerbate the UK’s dependence on imported oil, and leave more households paying the higher costs of petrol or diesel cars.

The committee also stressed that protecting the ZEV mandate is vital for maintaining investor confidence in public charging networks and lowering vehicle operating costs. To further accelerate this, the watchdog urged the Government to use its upcoming review of public charging to address high VAT rates and standing charges that penalise drivers without home driveways.

Industry warning over ‘unrealistic’ sales targets

The Society of Motor Manufacturers and Traders (SMMT) responded to the report by labelling the current ZEV mandate pathway as being “built on blind optimism” as it called again for a strategic review of the legislated quotas.

SMMT chief executive Mike Hawes stated that while manufacturers have regulatory flexibilities, the targets requiring 80% new car and 70% new van sales to be zero-emission by 2030 are unrealistic under current market conditions.

“The mandate compels supply, but it cannot compel demand. Despite the massive increase in EV sales, brought about by manufacturer investment, discounting and government incentives, take up is still below both expectations and targets.”

The SMMT states that manufacturers have had to heavily subsidise electric vehicle sales to boost demand, with the total industry discount reaching over £10bn across 2024 and 2025; although European clean transport and energy NGO Transport and Environment has said that claims about progress on EVs by the SMMT “do not stand up to scrutiny”.

Hawes said the CCC “cannot ignore the negative effect this market subsidisation is having on production, jobs and future investment”.

“Ambition matters, but a regulation that constrains consumer choice, damages industry and slows decarbonisation will undermine industrial, economic and climate goals.”

Matching the CCC’s call for VAT changes, Hawes said the Government should double down on enablers such as VAT reductions on charging and broader fiscal incentives to strengthen delivery.

EV, eco and charging sectors warn against another policy U-turn

Striking back against the SMMT’s demands, ChargeUK chief executive Vicky Read stated that the Government’s own climate advisers are “unequivocal” that the ZEV mandate must stand firm.

Read, who heads up the trade association for the electric vehicle charging infrastructure industry in the UK, said: “Doing so would not only threaten the country’s climate goals, but leave more households worse off paying high petrol and diesel prices. The CCC is also right to state that another U-turn would undermine the confidence of investors funding charging infrastructure rollout.”

Vicky Edmonds, chief executive of the Electric Vehicle Association (EVA) England, also cautioned that weakening the ZEV mandate again would be the wrong move.

“It risks knocking confidence just when drivers, manufacturers and investors need certainty.

“The focus now should be on fixing the real barriers: upfront cost, affordable charging for people without driveways, and a second-hand market people can trust. And on eVED (Electric Vehicle Excise Duty), Government cannot introduce a confusing or badly timed EV-only tax – it would send completely the wrong signal. EV drivers are clear they should pay their way, but any new system must be fair, simple, and introduced only when the market is ready.”

Meanwhile, the Energy and Climate Intelligence Unit (ECIU) said the Government had already bowed to industry lobbying by weakening the mandate last year.

By encouraging manufacturers to push plug-in hybrids (PHEVs) instead of EVs, Colin Walker, head of transport, warned that this policy “flip-flopping” could cost UK drivers up to £13.8bn in extra running costs.

Walker added: “With industry as a whole successfully complying with the mandate in 2024 and 2025, and on track to do so again in 2026, there is little case for any more changes. Furthermore, were the Government to cave in, the negative consequences would be considerable. EV prices could bounce back up, leaving people stuck driving expensive-to-run petrol cars in the midst of a global energy crisis. The UK’s efforts to improve its energy security by reducing its dependence on foreign oil imports would be weakened. And the Government’s ambitions to hit net zero – the only scientifically proven means we have to tackle climate change – would be severely undermined.”

The CCC’s Progress in Reducing Emissions 2026 Report to Parliament is online here.