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EV rules relax to protect UK car makers from tariffs
9/4/2025
News
UK Prime Minister Sir Keir Starmer has introduced a raft of new reforms to boost British electric vehicle (EV) car manufacturers, along with tax breaks that potentially make it ‘cheaper and easier’ to own an electric car – in response to US President Donald Trump’s imposition of tariffs on import.
In a speech on Monday at the Jaguar Land Rover plant in the West Midlands, the Prime Minister announced measures designed to prop up the UK car industry faced with 25% tax on car sales to the US. Some carmakers, like Jaguar Land Rover, had threatened to suspend exports to the US.
Starmer announced relaxation of the EV mandate, alleviating concerns that car manufacturers were facing fines of £15,000 per non-compliant car sold, on top of the new 25% US duty – which could wipe out British car manufacturing. Starmer has chosen to reduce this fine to £12,000.
Furthermore, in an effort to boost EV sales, the sale of hybrid cars will be allowed to continue until 2035. Sales of new pure petrol and diesel cars will be banned in 2030, in line with the Labour party’s pre-election pledge to end the sale of all new cars with internal combustion engines (including hybrids) from 2030.
Carmakers will be given more flexibility under the new rules, so ‘no British-based manufacturers should have to pay the fine or pay foreign firms for EV credits,’ said the Prime Minister.
Under the previous rules, if a carmaker failed to meet its targets, it could buy credits from a company that does satisfy this requirement – such as brands that only make EVs, like Tesla or Chinese manufacturer BYD – in order to avoid fines. What’s more, under the former rules, 28% of new cars sold this year in the UK had to be electric. This target would rise annually, reaching 80% in 2030 and 100% in 2035.
Under the new mandate, manufacturers will be allowed to balance annual targets against each other until 2030, to avoid fines by selling more EVs in the later years of the mandate.
In addition, there is a move to persuade British motorists that a switch to EVs will make them better off, despite higher upfront costs. The government is to put £2.3bn towards tax breaks for people buying EVs, while also improving charging infrastructure, with the promise of ‘one charging point to pop up every half hour’, said Starmer.
Speaking on BBC Breakfast about the impact on carbon emissions of the UK government’s changes to EV rules, the UK Transport Secretary Heidi Alexander said: ‘The changes have been very calibrated so as not to have a big impact upon the carbon emissions savings that are baked into this policy. In fact, the impact on carbon emissions as a result of these changes is negligible.’
