MPs on the Business and Trade Committee (BTC) have urged the Government to bring forward the planned review of the ZEV mandate as they warn of an “existential risk” to the UK’s automotive sector.

In an open letter to the Department for Business and Trade (DBT) and the Department for Transport (DfT), members of the cross-party select committee warned that the combination of “outdated” ZEV mandate thresholds and the threat of new trade barriers with the EU pose a severe, potentially fatal risk to UK automotive manufacturing.

The BTC urged the Government to bring forward the ZEV mandate review to be concluded before the end of this year and called for other measures to support the UK auto industry.

The UK’s ZEV mandate is a legally binding policy that requires car and van manufacturers to sell a rising, minimum percentage of zero-emission vehicles, mostly fully electric vehicles, each year. It was officially introduced and passed into law in January 2024.

The required percentage of zero-emission vehicles increases incrementally each year. For 2026, the target for cars is 33%, followed by 80% by 2030 and 100% by 2035, after which point everything sold new must be entirely zero-emission.

But it’s the van targets that have caused particular concern. These are set at 24% for 2026, 46% by 2028 and 70% by 2035.

Latest figures from the SMMT show that battery electric cars (BEVs) accounted for 26.2% of new car registrations in April and 23.1% for the first four months of the year – compared to a target of 33%.

Among the new van market, fully electric vehicles made up 11.1% of registrations in April and 9.4% for the year to date – a big shortfall of the 24% target.

Manufacturers who fail to meet their annual zero-emission sales quotas face financial penalties. But they can also comply with the mandate by reducing CO2 emissions from petrol and diesel sales, borrowing credits from future targets, and purchasing credits from other carmakers through “flexibilities”.

In April 2025, the Government significantly softened the ZEV mandate to give carmakers more flexibility. While headline EV sales targets for manufacturers remained intact, regulators introduced major leniency measures to ease the transition. These included allowing hybrid cars on sale until 2035, while delivering Labour’s manifesto commitment to stop sales of pure new petrol and diesel cars by 2030.

At the same time, new vans with an internal combustion engine (ICE) were also allowed to remain on sale until 2035, alongside full hybrids and plug-in hybrid vans.

Data shows that due to such flexibilities, automakers met the ZEV mandate in both 2024 and 2025.

But OEMs have told the Business and Trade Committee that the annual ZEV thresholds “no longer reflect market realities and the risk of imminent new trade barriers between the UK and EU”.

Lisa Brankin, chair and managing director at Ford of Britain and Ireland, told the committee that although demand for EVs has increased, “we are not seeing customer demand” in line with the mandate’s implied tripling of EV market share over the next four years.

The letter also warns that the design of the mandate is now severely hurting profit margins of UK manufacturers.

In particular, manufacturers are heavily subsidising EVs to stimulate demand, but this is impossible to sustain.

Matthew Ogg, director of policy, SMMT, said that it was “unsustainable” for manufacturers to spend around £5bn a year subsidising EVs.

Ogg called for a “whole market review across Government” to consider the enablers of EV uptake, and the mandate’s alignment with wider industrial policy and concluded that if these issues are not resolved this year, the sector faces “a really precarious position next year”.

MPs also warned that concerned that the mandate is “actively redistributing value away from UK producers” by incentivising the purchase of credits from overseas.

Lisa Brankin confirmed that pure EV makers (such as Tesla or BYD) are “harvesting” credits from UK-based car makers – including firms benefiting from significant Chinese state subsidies.

The letter follows a commitment by Transport Secretary Heidi Alexander in the House of Commons yesterday (21 May 2026) to look again at the operation of the ZEV mandate.

Liam Byrne MP, chair of the BTC, said: “Britain’s carmakers are being asked to carry a burden that is becoming impossible to sustain.

“Manufacturers are now spending billions discounting electric vehicles to stimulate demand, while British-based firms are effectively paying overseas competitors for compliance credits, including companies benefiting from major state subsidy abroad.”

He added: “The transition to electric vehicles is essential. But transitions succeed when they are grounded in commercial reality and backed by a serious industrial strategy. That’s why we need a whole-market review that aligns decarbonisation with competitiveness, protects domestic production, and ensures Britain remains a country that makes cars and not a nation that merely imports them.”

However, the Electric Vehicle Association (EVA) England said it was poor judgement at a crucial point in the EV transition.

Vicky Edmonds, chief executive officer, commented: “The UK’s focus should be on how to support mass uptake of EVs, in the face of clearly rising demand: interest in EVs is increasing across sales platforms and around two-thirds of petrol and diesel drivers are now considering going electric.

“EVs are proving to be more resilient than ever in the face of global price shocks. The priority must be turning that driver interest into real transactions, not creating more confusion about the future. The message should be clear: switching to electric remains the cheaper, cleaner and more secure choice.”

The open letter is online here.