What Is The 'ZEV Mandate' And Why Is It Important?

The 'ZEV Mandate' is a new law that has come into force as of 3rd January 2024. It imposes a framework for automakers and the transition to EVs.

As of today, the Zero Emissions Vehicle (ZEV) Mandate has come into force. The gov.uk website describes the ZEV Mandate as a "government policy that requires car manufacturers to sell a certain percentage of zero-emission vehicles (ZEVs) each year."

This only applies to new cars and vans sold in England, Wales, and Scotland.

The percentage of ZEVs that manufacturers need to sell starts at 22% in 2024 and will gradually increase each year, reaching 80% by 2030 and subsequently 100% by 2035.

The goal of the ZEV Mandate is to accelerate the transition to electric vehicles and reduce greenhouse gas emissions from the transportation sector.

The kicker? Automakers who sell ICE (internal combustion engine) vehicles outside of the 22% starting allowance will be fined £15,000 for every one sold. 

To put this into perspective, if a brand sells 10,000 vehicles this year in the UK, 7,800 of them can be ICE or hybrids while 2,200 of them need to be fully electric. If they sold 7,850 ICE vehicles, they would fined £750,000 for going 50 above the ZEV Mandate allowance.

Below you can see the percentage expectation per year for the ZEV Mandate for both cars and vans.

As you can see above in the image taken from the gov.uk website, the trajectory will be reviewed to ensure it can be achieved by 2035.

Here are some of the key points for and against the ZEV Mandate

Arguments in favour:

• The ZEV Mandate will help to reduce air pollution and greenhouse gas emissions, which will benefit public health and the environment
• It will create jobs in the electric vehicle industry thanks to the increase in demand for sales
• It will make electric vehicles more affordable by increasing demand and competition

Arguments against:

• The ZEV Mandate could make cars more expensive, especially for low-income families, since EVs are generally more expensive than ICE
• It could lead to job losses in the traditional ICE car industry
• It could create problems for people who live in areas with limited access to charging infrastructure

Overall, the ZEV Mandate is a complex policy with both potential benefits and drawbacks. It remains to be seen how it will ultimately impact the UK car market and the environment.

What does this mean for EV leasing?

It means we will potentially see some very cheap electric vehicle leasing deals. This is because manufacturers will want to avoid being fined £15,000 per car outside of the ZEV Mandate percentage.

In order to meet the 22% EV sales this year, they may be putting large amounts of contributions toward their EVs in order to hit their targets. 

Don't be surprised if you see some companies putting a £10,000 contribution toward getting their EVs sold this year (and the coming years).