Electric car prices are expected to drop as much as 20% after the government changes key new industry rules.
The new rules are part of the government’s Zero Emission Vehicle (ZEV) mandate, due to be introduced in 2024, which obliges automakers to sell a certain percentage of zero-emission vehicles in the UK.
The exact ZEV targets that automakers will have to meet every year from 2024 onwards have yet to be set, but it is already clear that manufacturers who fail to meet them face hefty fines.
The ZEV mandate was announced earlier this week as part of the government’s net-zero strategy, which sets the guidelines and proposals to decarbonise all economic sectors, including transport, in order to meet the government’s legal demand for a net-zero carbon Emissions to be met by 2050.
The aftermath of the ZEV could force automakers to lower EV prices to make them more affordable for new car buyers and ensure government targets are met.
“The price of electric vehicles will drop by at least 10 to 20%,” says auto consultant Martin Ward, who has been in the industry for 50 years, primarily at the CAP auto pricing business (now CAP HPI).
However, while price cuts may be imminent, Ward warned that car buyers might have less choice as manufacturers may decide that there are “better” markets elsewhere to sell to with fewer restrictions.
Ward said, “You have to wonder if, as a manufacturer, you would be dealing with the UK and the hassle of making right hand drive cars that cost more money when you face penalties?
“So I think there is a risk that Britain will become a poor relative.”
The CAZ rules are designed to reduce UK greenhouse gas emissions. According to the latest government figures, transport is one of the worst polluters of any sector of the economy at 23% in 2019, with the majority (55%) coming from passenger cars.
In addition to the ZEV mandate, the government announced a further 620 million. However, what portion of the 620 million pounds sterling will be received for each aspect has yet to be determined by the government.
