UK To Subsidise China Car Manufacturers
By Paul Homewood
https://www.gov.uk/government/news/government-sets-out-path-to-zero-emission-vehicles-by-2035
As noted previously, the Zero Emission Vehicle (ZEV) mandate took effect last month. Just to recap, this is how it works:
Any manufacturer that does not have enough allowances, one way or another, will have to pay a fine of £15000. Manufacturers with excess allowances will therefore be able to sell these at close to £15000, as demand will almost certainly exceed supply. (This assumes that total EV sales are less than target, which seems highly probable).
As I reported a a couple of months ago, the Government has confirmed that the mandate cannot be legally imposed on foreign manufacturers. Their response was that they hoped the likes of BMW would simply comply!
But what about foreign manufacturers who export EVs to the UK? Would they be awarded allowances?
I asked the DfT, and this is their reply:
It could not be clearer then. If Tesla or one of the Chinese EV makers export to the UK, they will be given allowances which they can sell to UK manufacturers.
Chinese owned MG and Polestar, for instance, sold 34,000 EVs in this country last year. So their allowances would be worth £510 million. Tesla’s sales of the Y and 3 models totalled 49,000, worth £735 million
And with China already the world’s leading car exporter, and Chinese owned BYD challenging Tesla in global sales, these figures will quickly shoot up.
The cost will fall on UK car manufacturers, and probably end up being passed on to car buyers. The AA has already indicated that carmakers would cap the number of non-electric cars they sell, in order to hit the target. This will inevitably force prices up.
Funny, but I don’t recall voting to send billions in subsidies to China!
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NOT A LOT OF PEOPLE KNOW THAT 
This, despite the study done recently by Volvo informing the world that BEV’s have to be run for 90,000 miles before they break even with ICE cars in terms of lifetime CO2 emissions.
This is confirmed by Westminster Council in their announcement that they are raising parking charges for BEV’s because their lifetime emissions are so high.
Our government lurches from one ridiculous claim to another.
The last para.in Mr Edwards response was the only one that actually responded to your request. The preceding 4 paras. were little more than a sermon to the ignorant . It reads like a one-size-fits-all letter to be sent to enquiries that seem similar.
Bring back old fashioned civil service exams which require writing competence.
I think paragraph 2 is complete bullshit.
Is Matt Edwards saying this mandate does not apply to Northern Ireland?
Thanks for getting this response from the DfT Paul. Now we all know what the most effective suicide note in history looks like.
indeed.
Is there no end to the insanity of Net Zero?
It will come to an abrupt end sooner or later.
It would seem that the lunatics have really taken over the asylum! God help us.
The source of this madness is the declared target of moving to a net zero economy. It’s a totally fraudulent policy based upon theory. With our establishment blind drink on the Kool Aid, what hope is there?
The government is participating in a Net Zero cult! Whatever common sense they ever had has disappeared completely! It’s as if they have become zombies in their inability to think rationally.
Why are we doing this? To purify the atmosphere? What about lorries? Large diesel powered 12 wheelers? Agriculture? Aviation? Shipping? Oh and UK’s one percent of global CO2? China’s 31% ? What on earth are we playing at?
Well, I’m taking all this Net Zero on board and have decided it’s time for a new car!! NOT BEV, NOT Hybrid but good old fashioned PETROL. Should last me out.
subsidies to China! TikTok!
Manufacturers with excess allowances will therefore be able to sell these at close to £15000, as demand will almost certainly exceed supply.
I think greater margin will be required. You pay your fine, and you are done. For sure. The fine government might challenge you on someone else’s alleged ‘excess allowance.’
Perfidious Albion.
De-carbonisation. What on earth does that mean? No carbon, carbon fibre charcoal for the grill, methane, carbon dioxide, carbon monoxide, any carbon gas, acid or compound. If carbon is not qualified it is absolutely meaningless so why aren’t the mainstream media, governments, power elites never condemned for being so vague. Decisions cannot be based on this term alone.
Even the EU facilitated a similar arrangement – albeit for arch subsidy-harvester Tesla’s benefit:
“Fiat Chrysler spent over $300 million on green credits in Europe last year — mostly from Tesla”
https://www.cnbc.com/2021/03/03/fiat-chrysler-spent-eur-300-million-on-green-credits-mostly-from-tesla.html
The Government don’t care what happens and are probably looking forward to the additional revenue of £15K/ice vehicle sold above the reducing quota. If it destroys UK manufacturing and impoverishes the nation then this in itself will reduce our CO2 emissions.
I received the following reply from Anthony Browne MP, Minister for Aviation and Decarbonisation via my MP back in November when I questioned the financial assistance this would be giving to the Chinese :
“The introduction of the ZEV mandate means that the UK will have the most ambitious regulatory framework for the switch to electric vehicles (EVs) in the world. The mandate will require 80% of new cars and 70% of new vans sold in the UK to be zero emission by 2030, increasing to 100% by 2035. The decision to push the phase out date back to 2035 was taken to provide more time for the second-hand EV market to grow and to provide investors with more confidence to invest in charging infrastructure. It should be noted that these targets and dates do not apply to second hand petrol or diesel cars and vans, which may continue to be sold after 2035.
If a manufacturer faced a fine for not meeting their targets, there are no restrictions or rules to prevent them passing on this cost to consumers. However, the regulation provides additional flexibility for manufacturers that may need it, particularly during the initial three years of the mandate (20242026) by allowing them to borrow allowances from future years or to trade allowances with manufacturers that sell more ZEVs than required. The cost of those allowances will be determined by market forces, but it is estimated to be far below the £15,000 compliance cost.
Based on current cycle plans, the Department’s evidence suggests that no manufacturer will need to pay fines, and there will therefore be no need to pass this onto consumers. According to manufacturers’ current market share and their public commitments on zero emission vehicles, the Department’s analysis indicates that two-thirds of the new cars sold in 2030 will be zero emission, even without the additional supply certainty from the mandate.
Following the most recent consultation, the Government amended the amounts that manufacturers will need to pay in the event that they are noncompliant with requirements after exhausting all other compliance routes. While the proposed amount of £15,000 per allowances for car manufacturers has been confirmed, the amount that van manufacturers would need to pay has been halved in the first year of the scheme. Should a van manufacturer be non-compliant in 2024, they face a payment of £9,000 per allowance, before the payment becomes £18,000 in 2025 and later years, providing van makers with additional transitional provisions than had been consulted on.
The Government is aware of the risk posed by Chinese EVs being “dumped” into the UK market and is carefully monitoring the situation. The Trade Remedies Authority has all the powers it needs to defend the UK against unfair international trade practices. The Trade Remedies Authority is not currently investigating EVs originating in China, but if manufacturers think that they are affected then they should contact the Authority. The automotive sector is a key strategic industry and a national asset, and the Government can and will step in to protect UK national interest in the face of any unfair practices with robust anti-subsidy measures.
The Government expects the transition to electric vehicles to help families with the cost of living. While today, a new ZEV costs more to buy outright than its petrol equivalent, most drivers in the UK (around 80%) will buy their cars on the used market. Some electric vehicles on the used market are now similar in price to their petrol and diesel equivalents. In many cases, an electric vehicle is cheaper to run than a petrol or diesel car, with lower maintenance and repair costs, as well as also being exempt from vehicle excise duty until 2025.
Finally, the Government does not currently have plans to end the sale of petrol or diesel fuels, or to ban the sale of new gardening equipment.”
As a good TV series on WW2 commented as the Germans commenced the Battle of Stalingrad ‘What could possibly go wrong?’
Quite lunatic. Cheaper to run without the taxes that will have to be put on them, more expensive to insure, far shorter range. So they will make us poorer. Claiming they will not is either lies or ignorance. I despair that Tories think the government can make stuff be cheaper than markets can.
And it’s not manufacturers that aren’t being “compliant”, it’s the public – the electorate these morons are supposed to represent. We aren’t choosing EVs. It’s not then the job of the state to make us do what we don’t want to do.
And so the CO2 lie continues…. Although historical data is very clear about the true relationship between CO2 and global temperature (temp driving CO2), Net Zero must remain alive…..
Not only historical data such as the Roman and Medieval warm periods when vines were grown up by Hadrian’s Wall and barley grown in Greenland, as well as the Vostok Antarctic ice core samples showing CO2 following temperature, but I doubt anyone can stll believe this anthropogenic CO2 myth after coming across the work of Professors Happer & Wijngaarden who have shown that doubling atmospheric CO2 produces negligible additional GHG effect because of IR saturation :
Mr Happer has always be great to listen to.
According to the Domesday book (1086) there were at least 28 Vineyards in England and I am willing to bet they produced wine better than that watery acidic concoction produced now.
It’s becoming clear that this is the most idiotic bit of legislation yet passed by the Govt in its pursuit of the net zero myth.
Did it not occur to ANYONE in Govt that the legislation will act as a massive incentive for foreign EV manufacturers to sell their cars in Britain, as each one will be subsidised by the allowances they can sell to ICE car manufacturers.
I foresee car manufacturing pulling out of Britain completely
I think we need a campaign saying “don’t buy an EV as it subsidises foreign EV makers like China, and will cause the shutdown of our remaing car manufacturing”
But that won’t happen. You can’t just slap £15,000 on every new car. They won’t sell. And because the second-hand market won’t support any increase, buying new would become madness. The allowances will thus be worth very little.
So whats left of our once world leading motor industry will be completly f*cked then.
Apart from the odd niche manufacturer who may get away with passing that charge on No other vehicle makere will be able to get away with it.
As EV sales make up only a small percentage of total UK vehicle sales and won’t IMO be able to scale up to fill the void left by the demise of ICE vehicles then what?
Which then leads on the the bigger scenareo of what happens when people are unable to to work? As we all know here not every one has adesk bound job close to home and appart from major cities UK public transport is woefully lacking, I my own case there is ZERO public transport within 45 minutes walk along dark hilly lanes.
Welcome back the personal import industry since the regulations only apply to manufacturers registering vehicles not private individuals. In fact I think an independent company to do it as well.
Yes , more than likely. We can resort to the Cuban solution: viz repair and rebuild our private cars in perpetuity. Buy shares in Unipart in quantity a.s.a.p.
Oh, well done! I hadnt thought of that.
I think this is wrong. The tradeable allowances can be traded at any value. The value will be what can be added to the price of a new car and it still be sold. That might be £10.
Great comments and thoughts as usual from everyone and thanks to Paul as wellforhis tenacity.
No surprises that the inanities compound.
I recall a fair time ago discussing with an ardent green locally about various issues, including flooding, noting that those not as sensible as their ancestors to live on ground higher than the rivers were currently benefitting from the kind support of 4x4s bringing in bottles of water.
They went on to concede that such things would be necessary, but only for emergencies.
The concept of amortisation was beyond them.
JLR Zil lanes for the Mayor of London and chums?
Good to see the Belgian farmers doing their thing in Brussels today.
Indeed, some might say we could do with some of those peaceful protests here .
Ot will do no good. Brussels is immune, which is why it was good to leave. What is more important is whether Le Pen can win in France and AfD continue to make gains in Germany - they are polling second now. Add in Vox in Spain, whats happening in the Netherlands and Sweden, and you have change across Europe and some interesting European elections. The Progressives are whining about “fascism” whilst ignoring their own extraordinary authoritarian Green demands.
Indeed!
That’s one reason why I’ve joined and will vote for the Reform party, having been a Tory voter all my life.
Reform wants nothing to do with the net zero nonsense. They may not win any seats, but a strong vote will give the rest of them a powerful message,
The answer is very unclear but I don’t think the tradeable amounts are worth what you say. If I sell 100% EVs, then I have 78% tradeable in the first year, falling to 20%. Thus Tesla’s is worth £573m not £735m. And I don’t think they are worth £15,000. They are worth what can be put on a new ICE car and it still be sold. If you can only add £1,000 to the price of a new Ford say, then you would only pat £1,000 for the right to be able to sell it. In most cases, the rights are going to be worth not much as manufacturers will not be able to pass on much cost.
If they do not buy these allownances, they either pay a fine of £15000, or don’t sell the car!
Almost certainly it will be the latter!
Remember though that this £15000 will be recouped from all their sales. So if Ford, say, sell 100,000 ICEs and no EVs, they will need to purchase 22,000 allowances in Yr 1. At £15000, that’s £330 million; spread over 100,000 cars , that’s £3300 each.
My guess is that we will start to see new ICE car prices rise, as we have seen with gas boilers. This in turn will depress demand, thus making the ZEV mandate easier to achieve.