Car makers in the UK are expected to hit their zero-emission vehicle (ZEV) mandate targets in 2024 after new model launches and a record September pushed the industry out of the danger zone, according to the latest analysis of sales figures.

Monthly sales of EVs broke past 50,000 in September for only the second time, led by the Tesla Model Y, to account for a fifth of the market, according to figures published by automotive body the SMMT. EV sales grew 24% to reach 56,387, equivalent to a 20% market share. The record EV sales month was March 2022, with 52,200 sold.

The increase pushed the annual EV share up to 18%, its highest level yet. 

Under VETS (the Vehicle Emissions Trading Scheme), more popularly known as the ZEV mandate, carmakers must sell enough EVs to reach 22% of the overall target, but flexibilities in the scheme mean the actual target more like 18%, according to EV-focused analyst firm New AutoMotive.

Carmakers are on course to hit this lower target. “The industry now has a surplus of credits,” Ben Nelmes, CEO of New AutoMotive, said in his company’s analysis of UK figures to the end of September.

There was even some evidence that some companies were slowing down the pace of EV sales after comfortably achieving their targets. BMW EV sales for example were down almost a third compared to the same month the year before, while those for MG were down 9%. 

Typically EV sales are lower margin than those of combustion engine models, providing an incentive not to exceed targets. Many carmakers are in the midst of model changeovers or launches ahead the European Union’s big squeeze on CO2 emissions in 2025. According to Renault, the change will force carmakers to sell similar percentages of EVs as the UK requires.

New EV launches generated around 5,000 of the nearly 8,000 jump on EV sales in September compared to March, the other big sales month of the year. 

The Volvo EX30 and Peugeot e-3008 made the biggest impact, hitting 7th and 8th in the electric chart for the month with sales of 1670 and 1660 respectively. Also helping their brands in terms of EV share were the Ford Explorer, Polestar 4, Renault Scenic and VW ID 7.

Many carmakers were significantly below their EV target after the first six months and risking fines, account to Autocar analysis. 

Many have since improved, with Ford EV sales for example jumping from 4% of the company total to 8.6%. 

However, Ford is still a way off meeting the 17.4% EV target NewAutomotive has calculated it needs need to hit with flexibilities taken into account, for example by cutting CO2 averages by selling more plug-in hybrids.

Also in danger of being fined is the VW Group, which is currently at a 14% share with a goal of 18% to reach. Renault is also way behind with a 6.9% share and a target of 17% to hit. More comfortable is Stellantis, which is close at 20% with a target of 21%. Also in the comfort zone are BMW, Geely Group (including Volvo), Mercedes-Benz, SAIC (MG).

Those with no EVs like Suzuki can either borrow or “mortgage” against future EV sales, buy credits from another carmaker, or pool with companies that are financially linked. 

The rise in electric sales have largely been driven by fleet buyers thanks to government incentives for company car drivers. Private buyers aren’t given nearly the same support, reflected in sluggish sales in a sector that’s driven much more by price than corporate sales.

Car makers are offering their own incentives to move the sales needle. EV discounts were running at around 9.6% of the cost of an electric car – equivalent to an average of £5596 – the What Car? Target Price team calculated at the start of September.

Tesla put the Model Y back at number 1 on the EV sales chart largely due to an eye-catching personal lease offer of £299 a month. Cars had to be registered before the end of the month, ensuring they counted for the September figure, and to help Tesla meet its own internal end-of-quarter targets.

Other companies offering retail discounts in September included Audi, which took £6,750 off the price of a new Q4 E-tron if the buyer chose the PCP finance deal. Meanwhile, Honda cut from £3500 off the new price of a Honda eNY1 electric SUV, again linked to a PCP deal.

Carmakers including Stellantis and Ford have pushed back against the stringency of the VETS scheme, even as they work to meet it. Ford UK head Lisa Brankin called for the UK government to halve the VAT on EVs. “We need incentives to drive demand in the consumer market,” she said. Brankin has also called for a reduction in fines until 2026.

The SMMT flagged up that private diesel sales in September had increased more than private EV sales in the month to make the point that government policies were driving consumers toward a fuel that was falling out of favour.

However private EV sales were still above those for private diesel sales, whose increase in September was largely driven by a rise in demand for JLR products. Sales of privately bought diesel versions of the Range Rover Evoque rose 380% in the month compared to September last year to top the sector.

JLR dominates the shrinking diesel segment to such a degree  than a marketing push on a single model can move the whole market. So far this year overall diesel share has fallen to 6.4%, against 18% for EVs. Overall JLR diesel sales rose 40% in September, a month in which overall sales fell 7.1% 

Carmakers are caught in a catch-22 situation. They have to sell more EVs to avoid fines, but to do so likely means selling electric cars at a low margin or a loss. However, without opening up their books to show the damage, the ZEV mandate looks as though it’s working precisely as intended.

“We’re beginning to see a seismic shift in the UK’s car market, thanks to smart, ambitious regulation,” Ralph Palmer, UK electric vehicles officer for Brussels-based green group Transport & Environment, wrote in a blog following the September figures. He added that the Government “should not buckle to this pressure” to water down the regulation.

Cheaper EVs coming to market such as the Renault 5, Citroen e-C3, Dacia Spring and Leapmotor T03 will relieve pressure on car makers to discount higher-end models to the same extent as they target volume segments. However expect carmakers to continue lobbying for government help in convincing more sceptical private buyers as the rules tighten.