Key facts
- Carmakers are delaying investment in UK factories due to uncertainty over electric vehicle sales mandates.
- The SMMT is pressuring the government to relax the zero emission vehicle mandate.
- Business Secretary Jonathan Reynolds indicated the mandate is likely to be watered down.
- UK vehicle production decreased by 7.5% in the first half of 2026.
- The EV charging industry and environmental groups oppose relaxing the mandate.
Carmakers are postponing crucial investment decisions for UK factories pending a relaxation of electric vehicle sales regulations, according to Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT).
Hawes stated that manufacturers with existing UK operations are considering introducing new models but have paused these plans until the government eases the zero emission vehicle (ZEV) mandate. This mandate requires carmakers to sell an increasing proportion of electric vehicles annually up to 2030.
The automotive industry is facing significant challenges, including intense competition from China, U.S. tariffs, and the substantial costs associated with transitioning to electric technology. These pressures have contributed to a 7.5% decline in UK vehicle production during the first half of 2026, with factories producing 386,000 vehicles.
Business Secretary Jonathan Reynolds has indicated that the government is likely to modify the ZEV mandate to retain car manufacturing in the UK. However, any such move faces strong opposition from the electric car charging industry and environmental campaigners, who warn of increased carbon emissions.
While Hawes did not name specific companies, Toyota and Mini are among those reportedly considering delays. Nissan is in discussions to build a vehicle for Chinese manufacturer Chery at its Sunderland plant, though no final decision has been reached. Jaguar Land Rover is also preparing new models.
Further complicating investment decisions are the UK's trade relationship with the EU and potential tariffs on vehicles exported to the bloc if batteries are not sourced from within Europe, according to rules of origin. The EU is also considering its own 'made in Europe' rules regarding subsidies, with calls for the UK and other countries to be included.