The UK government has substantially relaxed the framework of its zero-emission vehicle (ZEV) mandate in a show of support to the automotive industry, following the US's imposition of 25% tariffs on all vehicles imported into the country. 

As part of the shake-up, the government has confirmed that 'full' hybrid cars such as the Nissan Qashqai e-power can remain on sale from 2030-2035, low-volume car makers will be exempt from the need to achieve an 80% electric car sales mix in 2030, and all manufacturers have greater flexibility in how they can meet the annual EV sales targets imposed by the mandate.

Late last year, the government pledged to rework the mandate in consultation with the car industry, in light of organic demand for electric cars falling well below the mandated targets and threatening car makers' ability to trade profitably. The government launched a public consultation, and has now brought forward its response.

Under the terms of the mandate, car makers must achieve a 28% EV sales mix in 2025, but recent industry figures reveal that demand is running more than eight percentage points behind that.

The government had already pledged to roll out the changes as a matter of urgency – after car makers spent billions on discounting EVs to boost demand and hit last year's 22% EV mix target – but the need for action became more acute last week when US president Donald Trump announced swingeing 25% import tariffs on all foreign-made cars, a huge blow to the UK car industry, which sent 27% of its output Stateside last year.

As a result, Prime Minister Sir Keir Starmer has accelerated the roll-out of the changes, saying that "the new era of global insecurity means that the government must go further and faster reshaping our economy through the Plan for Change".

The government says the changes will "make it easier for industry to upgrade to make electric vehicles, while delivering the manifesto commitment to stop sales of new petrol and diesel cars by 2030, which will help even more British consumers access the benefits of cheap to run electric vehicles".

It will follow up the revamped ZEV mandate with the unveiling of a "modern industrial strategy" in summer, "which will help British businesses realise the potential of industries of the future".

The UK government is still attempting to negotiate a new trade deal with Trump in a bid to neutralise the impact of the tariff, but ministers are drawing up a list of retaliatory measures the UK could put in place in the coming weeks if he is unsuccessful. 

The government said: "Support for the car industry will be kept under review as the impact of new tariffs become clear."

Hybrids to remain on sale past 2030

The government says that allowing hybrids to remain on sale until 2035 will "ease the transition and give industry more time to prepare".

Last month, there was a 37.9% year-on-year uptick in registrations of plug-in hybrids in the UK, and other types of hybrid – including mild hybrids – recorded a 27.7% hike, giving electrified cars a combined market share of 25%, compared to 20.7% for pure-electric.

Confirmation that full- and plug-in hybrids can stay in showrooms until 2035 comes five years after former prime minister Boris Johnson imposed the 2030 ban on the sale of new combustion-engined cars, while allowing some hybrids with a "meaningful electric range" to continue for another five years - though the definition of 'meaningful' was never publicly defined.

The government now says that both 'full' hybrids (HEVs) – those with a smaller battery that is charged solely by the combustion engine – and PHEV models will now be allowed between 2030 and 2035, although it has yet to outline any specific technical requirements, instead listing some example models. The government cites the Toyota Prius as one example of an HEV, although that model is currently sold exclusively as a plug-in hybrid in the UK. It also lists Nissan's e-Power cars, which are electrically driven, but with a petrol engine on board serving as a generator to top up a small-capacity traction battery. 

The government does say that, from 2030, manufacturers will need to "make sure the overall CO2 emissions from their petrol and diesel cars is 10% lower than it was in 2021".

Autocar has contacted the Department for Transport for clarity on exactly what the new rules mean for mild hybrids, range-extenders and traditional full hybrids. 

Nonetheless, the announcement will come as a significant reassurance to car makers investing heavily in hybrid technology in a bid to decarbonise their line-ups amid slower-than-expected demand for pure-electric cars.

Toyota, for example, had previously threatened "there would be an impact on a number of areas" of its business in the UK if full-hybrids – like the Corolla it builds at Burnaston in Derbyshire – were banned from sale alongside pure-ICE cars in 2030. 

And Kia's UK boss Paul Philpott told Autocar recently that clarity on post-2030 hybrid sales "will help us make final decisions about product line-up during that period". 

The Society of Motor Manufacturers and Traders (SMMT) had previously urged the government to recognise "the role that all technologies – including hybrids, plug-in hybrids and hydrogen – have to play in decarbonising road transport, as either stepping stones towards, or full delivery of, a zero-tailpipe-emission market by 2035".

Meanwhile, the government has confirmed that pure-ICE vans can stay on sale through to 2035, along with hybrid and PHEV vans. 

The fines for missing the ZEV mandate targets have also been reduced, from £15,000 to £12,000 per car for each manufacturer that misses the target.

Low-volume car makers exempt from rules

The revisions to the ZEV mandate also include a new exemption for "small and micro-volume" manufacturers from the ZEV targets and the new 2030-2035 hybrid requirements, so they now don't need to follow mainstream firms in achieving an 80% EV sales mix in 2030.

The government cites McLaren and Aston Martin as specific examples of companies that will be granted the exemption, but the 'small volume' definition applies to any firm producing fewer than 2500 cars per year.

The decision will help with "pressing some of the UK car industry's most iconic jewels for years to come", said the government. 

Currently, neither Aston Martin nor McLaren sell an electric car, and Aston recently delayed the launch of its first EV in favour of a new line of plug-in hybrid sports cars. This new exemption will give those companies – along with Bentley, Rolls-Royce, Lotus and LEVC – more time to transition their customers from combustion cars to EV alternatives.

The exemption will also apply to ultra-low-volume sports car manufacturers including Morgan, Caterham, Ariel, Radical, BAC and Gordon Murray Automotive - none of which have an electric car in production as yet.

Morgan boss Matthew Hole recently told Autocar that time was fast running out for his company to develop a pure-electric car by 2030, and called for urgent clarity on whether it would be obliged to.

He said there was "just way too much ambiguity" around the rules of the ZEV mandate for low-volume firms, and said Morgan's forward strategy was fully contingent on whether it would be exempt from the need to achieve an 80% EV sales mix in 2030.

More flexible EV sales targets

While the headline targets of the ZEV mandate are unchanged – meaning manufacturers must still achieve a 28% EV mix this year and 80% by 2030 – the government has made it easier for them to achieve compliance by making the Non-Zero Emission Car CO2 Trading Scheme (CCTS) more flexible.

This scheme essentially allows manufacturers to offset sales of non-electric cars by exceeding their CO2 reduction targets, and earns them a lower mandated EV sales mix target in a given year. 

One important change to the CCTS system is that car makers can now benefit from the credit-transferring mechanism through to 2029, having previously only been able to spend these credits in the three years to 2026.

This enables "significant additional flexibility to reward CO2 savings from hybrids" over the next five years, said the government. 

It will introduce caps for each year, but has not yet said what these will be. 

Meanwhile, the mechanism of 'borrowing' EV sales credits from future years will now be possible through to 2030, having previously been set to end in 2026. 

This means car makers can underperform against the ZEV targets in a given year if it compensates for that the following year - though there will be caps imposed upon this, too. 

Car makers are currently only allowed to 'borrow' up to half of their mandated 28% EV sales mix in 2025, and next year that goes down to a quarter.

Finally, manufacturers will now be able to trade credits between vans and cars: a credit for selling one electric car can be exchanged for 0.4 van credits, and an electric van credit can be exchanged for two cars.