The UK’s transition towards electric vehicles is changing the way car manufacturers price, market and sell their vehicles.
Under the Zero Emission Vehicle (ZEV) Mandate, manufacturers are required to ensure an increasing proportion of the new vehicles they sell are zero-emission models. This has created new commercial pressures for car makers as they balance government targets with changing levels of consumer demand.
The effects can be seen across the market, from EV discounts and manufacturer incentives to changes in model availability and the number of electric vehicles reaching the used-car market.
If you’re trying to understand how changes in the wider car market could affect your vehicle’s value, our car valuation guidance hub explains the main factors that influence what cars are worth.
How Manufacturers Are Responding to EV Sales Targets
Meeting EV sales targets requires manufacturers to persuade more motorists to choose electric vehicles while continuing to operate profitably across their wider model ranges.
This has encouraged manufacturers to use a mixture of pricing, incentives, product planning and sales strategies to increase demand for electric cars.
EV Discounts and Incentives
One of the most visible changes has been greater competition around EV pricing. Manufacturers may use discounts, finance offers and other incentives to make electric models more attractive compared with petrol, diesel and hybrid alternatives.
Government incentives can also affect the price motorists ultimately pay for eligible electric vehicles.
Changing Model Ranges
Manufacturers can also adjust the vehicles they offer as the market moves towards electrification. This may mean introducing more electric models, changing production volumes or reconsidering how petrol, diesel and hybrid vehicles fit within their ranges.
These decisions are not driven by the ZEV Mandate alone. Consumer demand, production costs, competition and wider changes within the automotive industry can all influence which vehicles manufacturers choose to sell.
Managing ZEV Mandate Requirements
The system also includes several forms of flexibility for manufacturers. Depending on their circumstances, manufacturers may be able to trade, bank or borrow allowances and use other permitted mechanisms to help meet their obligations.
This means the transition is more complicated than simply requiring every manufacturer to sell an exact percentage of electric cars each year.
The ZEV Mandate isn’t the only government policy changing the economics of electric motoring. Our guide to car tax changes for electric vehicles explains another important change affecting EV owners and buyers.
Why EV Sales Targets Can Be Challenging for Manufacturers
Several major car makers are finding it difficult to hit the mandated requirement that 22% of this year’s sales must be zero‑emission models. Some are facing declining EV demand, others are stuck in transition phases, and a The ZEV Mandate is designed so that the proportion of zero-emission vehicles manufacturers are expected to sell increases over time.
However, manufacturers do not all face the same challenges. Some already offer extensive ranges of electric vehicles, while others are still adapting model line-ups that have traditionally relied more heavily on petrol, diesel or hybrid cars.
Consumer demand also matters. Manufacturers can develop and produce electric vehicles, but motorists still need to be willing and able to buy them.
Factors such as purchase price, charging availability, driving range, finance costs and changing consumer preferences can all influence the speed at which drivers move to electric vehicles.
The ZEV Mandate therefore includes compliance flexibilities that give manufacturers different ways of managing the transition rather than relying solely on the number of electric vehicles registered in a particular year.
As the targets increase over time, the challenge for manufacturers is ultimately to balance government requirements with the vehicles customers actually want to buy.
What Does the ZEV Mandate Mean for Car Buyers?
For motorists, the effects of EV sales targets are likely to be felt through the choices, prices and incentives available in the new-car market.
Greater competition between manufacturers can make electric cars more attractive through discounts, finance offers and other incentives. At the same time, manufacturers may continue to adjust their petrol, diesel, hybrid and electric model ranges as they respond to both regulation and customer demand.
Changes in the new-car market can eventually influence the used-car market too. As more electric vehicles enter circulation, greater numbers will ultimately become available to second-hand buyers.
Used EV values can also behave differently from those of equivalent petrol or diesel cars, particularly while technology, new-car pricing and consumer demand continue to develop.
The changing balance between supply and demand is already having an impact on the second-hand market, as our look at falling used electric car prices and their effect on vehicle values explains.
For anyone buying, owning or selling a car, the important point is that government policy is only one part of the picture. Vehicle supply, consumer demand, running costs, technology and wider economic conditions can all affect what a particular car is worth.
Could Changes in the Car Market Affect Your Car’s Value?
Changes in manufacturer pricing, vehicle supply and consumer demand can all influence used-car values — even when nothing about your own vehicle has changed.
If you’re curious about what your car might be worth in the current market, you can use jamjar’s free car valuation tool to get an up-to-date valuation based on your vehicle.