In a context where consumers have had more uncertainty thrown their way (something or other about tariffs!), and where the last government confused car buyers by creating negative “noise” around green initiatives while maintaining a big “stick” approach with ZEV targets; it’s significant to see positive and clear communication from government today. If consumers and businesses alike have both clarity and certainty in terms of the required direction of travel, it’s safe to assume we’ve got more chance of positively winding our way down our road to 2030.
For sure, there are still big issues to overcome. That journey certainly won’t be smooth driving all the way.
We all recognise that higher upfront costs are the biggest obstacle to faster EV uptake. In China, EV-ICE price parity has driven market uptake at typical “China speed”. And, nearer to home, Norway surpassed 90% EV penetration thanks to a full combination of incentives. They included hard incentives like grants and tax exemptions, and soft, like reduced tolls and parking rates. With existing funding gaps, a requirement for increased military spending, and now a tense trade context, there was little hope that any UK government could provide even more financial stimulus for new car buyers.
The challenge for OEMs is therefore still massive.
But, by adding in a good dose of flexibility over multiple years through to 2030 and including hybrids in the mix through to 2035, there’s now greater likelihood that they’ll be able to plot a realistic route forwards; even if some will need to increasingly “back-end” their EV sales volumes.
The biggest challenge is therefore centred on who can quickly and effectively rethink their design and production processes, incorporate the cost reduction benefits of the software-defined vehicles, and integrate the latest lower-priced batteries. The hard yards of cost reduction will be crucial, not just to sustain OEM profitability, but to reduce prices and incentivise consumer demand by bridging the ICE-EV price gap.
My glass is typically half full and I have confidence in the ingenuity of our industry to find solutions that can unlock these cost reduction challenges. They now have a bit more time and flexibility to enable that.
But let’s not forget that regulation is just one of the key drivers of the market. The other big factor is, of course, competition. From a consumer perspective, it’s great to see choice growing with over 70 new car brands selling in the UK in 2025 compared to “only” 45 in 2019!
With a competitive landscape like that, “winning” brands will surely be the ones who unlock those cost challenges faster than their peers.
