A decision by Sir Keir Starmer to water down targets for electric vehicle sales will increase the cost of some electric vehicles (EVs), The i Paper understands.
The Prime Minister has accepted calls from carmakers and the Unite union to slow down the pace at which manufacturers are expected to switch to electric cars, amid warnings that it risked crippling Britain’s automotive industry.
However, the loosening of the zero emission vehicle (ZEV) mandate is likely to mean that manufacturers will dial back some of the big discounts they were using to shift to comply with the target.
The ZEV came into force in 2024, with carmakers required to ensure that at least 22 per cent of car sales were electric in that year.
The target is scheduled to ratchet up each year until 2030, when 80 per cent of sales are required to be EVs. At this point, new petrol and diesel cars are due to be outlawed entirely, with only hybrid vehicles allowed to make up the remaining portion of sales.
If carmakers fail to hit the targets, they face heavy fines, although they can avoid penalties by buying credits from rival companies that overperform against the targets or by cutting emissions from vehicles elsewhere in their fleets.
However, the car industry has still complained that the ZEV is forcing companies to make huge discounts in order to sell EVs in sufficient numbers.
According to the Society for Motor Manufacturers and Traders (SMMT), in 2025, carmakers had to subsidise sales to the tune of £5bn, or £11,000 per EV. At the start of 2026, the SMMT warned that the discounts were “unsustainable” and putting Britain’s automotive industry at risk.
A decision has now been made to dilute the ZEV so that by 2030, only 50 per cent of models will have to be all-electric, rather than 80 per cent. As a consequence, the target for sales in each year up to 2030 will also be reduced from next year.
In taking the decision, Starmer is understood to have sided with the Business and Trade Secretary Peter Kyle, who wanted the ZEV relaxed, and against the Energy Secretary Ed Miliband, who wanted the existing targets to remain.
The decision is likely to have significant consequences for EV prices.
A government source told The i Paper that the change will mean carmakers “don’t have to do the discounts to the same level” as they do now.
An industry source said that the situation around discounts would be shaped by the revised ZEV targets and what happens to the underlying level of demand.
They said that carmakers would still have to ramp up their EV sales because they had invested billions in the transition to electric and had so many new products coming to the market.
According to Autotrader, once discounts and the Government’s Electric Car Grant subsidy were taken into account, the average cost of a new petrol car in April 2026 was £43,296, compared to £42,841 for an EV.
Sharon Graham, Unite’s general secretary, welcomed the reform of the ZEV mandate. She said: “This is a huge victory. UK car workers have been increasingly fearful for their jobs.
“The Government at the highest level has listened to the concerns of Unite and is now set to act decisively to protect the jobs of UK automotive workers.
“As Unite had said, the failure to act would have been an act of self-harm to a sector which is a jewel in the crown of UK manufacturing.”
The change is expected to be subject to a consultation which will be launched in the coming weeks.
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