All pumped up, Keir Starmer is right to relax the petrol car ban

Changing the Net Zero rules on electric cars won’t save the UK motoring industry from Donald Trump’s tariffs – but it will smooth the ride, says Sean O’Grady

The hard truth about the government relaxing its green sanctions on electric vehicles is that it’s not so much whether it’s the right or wrong thing to do, in light of Donald Trump’s tariffs – but that the move has simply become inevitable.

Government strictures placed on car companies if they failed to sell a certain proportion of EVs over the course of a year, ahead of the 2030 ban on petrol vehicles, were so harsh and so demanding, they have been creating grotesque distortions.

Try as they might, and despite the smooth patter of people in the showrooms, car companies haven’t been able to shift electric cars to a willing public all the while net zero targets keep moving.

The rules have worked such that if a car company didn’t reach its target sales for “pure” electric EVs, it would be effectively fined £15,000 per petrol, diesel or hybrid vehicle. Yes, £15,000. Each.

Which, needless to say, is way over any conceivable profit margin for anything other than the super-premium stuff. So the industry would do anything to shift its stock of “surplus” electric cars, with astonishing discounts available. But this does not make for a financially sustainable situation.

The alternative has been to “ration” sales of cars driven by an internal combustion engine, or even stop selling them altogether. This system also produced another unintended consequence.

To avoid fines, a given carmaker – let’s call it the Totally Fossil Fuel Motor Corporation – that was missing its EV targets could buy “credits” from another maker that had more than met its quota. So let’s say that Chinese All-Battery Electric Limited sells so many of its value-for-money EVs that it has a big credit to sell.

In the real world, that means that, under UK government orders, the Chinese giants would in effect be subsidised by both European and other car companies. This isn’t good for what’s left of the British motor industry – which, until things get going at Nissan in Sunderland and at Jaguar Land Rover, doesn’t make that many zero-emission cars.

Indeed, the government is caught between its obligations under climate crisis agreements, and its desire to also support those luxury brands who favour making petrol and hybrid cars. Aside from the European Union, the US is the largest export market for UK-built cars. Last year, our largest export of goods to the States, worth some £9bn annually, were cars and auto parts, a sector that has now been hit by a 25 per cent tariff.

There are a lot of competing industry interests to be balanced, as well as persuading a sometimes sceptical public that EVs will work for them.

At the moment, to put it bluntly, if you live in a flat or a terraced house (because you can’t traipse electric cables over pavements), it is impossible to make the practical case for EV ownership, irrespective of tax breaks or production quotas. So the rules were creating huge and expensive distortions.

Like estate agents, politicians and journalists, the general public doesn’t have huge affection for car salespeople, but things are getting ridiculous. Even with electric cars being better than ever, many with a real-world range of 200 or 300 miles on a single charge, and with some substantial tax breaks for business users, the underlying public demand for EVs just isn’t sufficiently there yet for the targets in the coming years to be hit – without making life easier for the carmakers.

Ever the pragmatist, this is exactly what Keir Starmer has done – actually, done again, because the old target of 100 per cent EV sales by 2030, the so-called petrol and hybrid car ban, has already diluted to 80 per cent in the Labour election manifesto.

The 80 per cent target remains, but hybrids and plug-in hybrids can still be bought until 2035, and the fines on the car companies have been reduced to £12,000 per non-EV. The regulations on vans are also being made more lenient. There’s also a new target for manufacturers to “make sure the overall CO2 emissions from their petrol and diesel cars is 10 per cent lower than it was in 2021”.

We come back, though, to some fundamental difficulties with the transition to EVs. The first is that, as mentioned, lots of people who would love to go electric cannot practically do so, because they lack off-street parking. The second is that they need to make the numbers add up, such as the extra cost of buying electric, despite the much lower running costs.

Third, people need to be sure of the government’s long-term instincts. In 2030, there will still be millions of petrol, diesel and “mild” hybrid cars out there with a decade or more of useful service left in them, even as sales of new ones are very tightly restricted. What will fuel duty be? Will we have road pricing to replace the substantial loss in tax revenues as petrol and diesel are phased out?

What will road tax look like? Are the generous tax breaks for company users of EVs sustainable? Can a system of cheap street charging for EVs be introduced?

If one of the keys to safe driving is to look ahead for dangers, then it is also true that for businesses and families thinking of buying an electric vehicle, some visibility as to what the future holds for them would be helpful, to say the least. After all, after buying or renting a home, a car is the next most significant financial outlay in people’s lives.

Perhaps motoring generally is just going to be more costly and more exclusive, as it was some decades ago, when only a minority could afford a motorcar and a used Morris Minor was considered a luxury.

The thought occurs that our long love affair with cheap personal transportation may be coming to an end – with profound effects on the way we live our lives.

Do you know where the nearest bus stop is?