BMW, Mercedes on track to meet tough U.K. EV target

The U.K.'s zero emission vehicle (ZEV) mandate is causing big changes to how automakers operate in the key sales market, new data shows.

This year sales of electric or fuel cell vehicles must reach 22 percent of registrations or automakers will face fines of 15,000 pounds (about $19,000) per car or 9,000 pounds per van.

Under the scheme, there is a so-called flexibility rule, which allows a brand that is heavily reliant on combustion cars to buy credits from electric-only brands. In addition, under the program's borrowing rule, a 5.5 percent BEV share is sufficient as long as the automaker exceeds the minimum rate in future years.

The chart below shows how 15 automakers are doing when it comes to reaching the 22 percent and 5.5. percent targets for battery-electric vehicle (BEV) sales after two months compared with how they did in all of 2023, based on analysis by market researcher Dataforce.

The data shows that three automakers are on track to meeting the 22 percent target: BMW, Mercedes-Benz and China’s MG.
 
Toyota has made a dramatic turnaround so far by focusing on sales of the full-electric bZ4X. The BEV accounted for 18 percent of Toyota sales after two months compared with a 0.5 percent share in 2023.

"With additional volumes from their upcoming urban SUV, Toyota now has a good chance to reach the 22 percent target," Dataforce analyst Benjamin Kibies said.

The downside for Toyota from the heavy emphasis on the bZ4X is that its U.K. sales fell 18 percent in February. A key reason was a big decline in sales of the Aygo X to private buyers.

"Considering the potential fines its sales could cause, the car has become quite expensive for Toyota UK," Kibies said.

With their new model introductions and BEV promotions, Kibies said it is "feasible" that Audi, Kia, Hyundai, Volkswagen, Mini, Vauxhall, Skoda and Peugeot will reach the 22 percent target as long as they "constrain their sales of ICE (internal combustion engine) cars."

He said it could be challenging for Nissan to reach the target given its current BEV share is below 9 percent.

"JLR has sufficient sales of the I-Pace to reach the 5.5 percent minimum requirement but will probably need to purchase additional allowances from other manufacturers," Kibies said.

Overall, U.K. sales were up 14 percent to 84,886 in February. It was the 19th consecutive month of growth for the market, which was led by VW brand for the ninth straight month, according to Dataforce.