Car industry reels from uncertainty over Rishi Sunak’s net zero plans

Rishi Sunak is expected to delay a ban on the sale of new petrol and diesel cars, sparking a backlash from the UK car industry which warns it will damage investment certainty.

The UK Prime Minister is expected to change the target from 2030 to 2035, something car boardrooms around the world are taking note of, creating uncertainty over carmakers’ plans to go all-electric in the UK.

Ian Plummer, a former Renault and Volkswagen executive and commercial director of online marketplace AutoTrader, said: “This shift will cause huge problems for manufacturers, who are in desperate need of clarity and consistency.”

“And it would hardly encourage the vast majority of drivers who haven’t already purchased an electric car to switch to one.”

Leading car brands such as Ford, Vauxhall and Volvo Cars have committed to becoming fully electrified within this decade and are making manufacturing decisions in line with this goal.

News of Sunak’s apparent policy shift comes just 100 days after the British car industry faces new rules forcing it to sell a certain proportion of electric cars from next year.

Automakers are busy making final preparations for the new regime, ordering models from factories and training dealers.

“Our business needs three things from the UK government: ambition, commitment and consistency,” said Lisa Brankin, chairman of Ford UK. “Relaxation in 2030 will harm all three.”

But other automakers may be secretly pleased, such as Toyota and Honda, which have been slower to roll out electric vehicles. “Some people will be angry, but the general sentiment is a collective sigh of relief… They will have more room to maneuver,” said one senior auto industry executive.

A man's hand adjusts a gas boiler
Rishi Sunak is also expected to play down the currently proposed ban on new gas boilers from 2035 ©AFP via Getty Images

The UK government is not the only one wavering on the targets it has set for industry to achieve net zero carbon emissions targets.

The European Union plans to ban the sale of new gasoline cars from 2035, and earlier this year it surprised the industry by admitting that some carbon-neutral fuels called “efuels” could be allowed to be used for longer.

Automakers across the continent have noticed an immediate drop in interest in electric vehicles as consumers begin to hedge their bets.

Just when automakers need to increase sales to avoid hefty fines, consumers could be confused. British rules will come into effect in January, requiring manufacturers to sell zero-emission vehicles at 22% of sales, a level that will increase every year until 2030.

“It’s like mobilizing an army and then sending them back to barracks for a few years,” said Toby Poston, director of the British Vehicle Rental Association.

Sunak’s move to net zero will be delivered in a speech on Wednesday afternoon as part of a campaign to drive home ahead of next year’s general election. The Conservative leader has sought to paint the opposition Labor party as environmental fanatics more concerned about climate change than the cost of living crisis.

Sunak is expected to water down the currently proposed ban on new gas boilers from 2035 and delay a ban on oil-fired boilers by nine years from 2026 to 2035.

The UK currently aims to phase out new petrol and diesel car sales by 2030, but leave some room for hybrids over the next decade.

Ministers have previously said some hybrid cars will not be allowed on sale until 2035 at the latest, creating serious uncertainty for manufacturers who offer a full range of hybrid car options and don’t know which ones will be allowed.

The change in ban lifts the threat to some hybrid models such as Toyota’s, which use batteries but have a relatively limited range on electric power alone.

Headline promises of 2030 have spurred electric car sales and helped drive investment in the UK, such as BMW’s decision to invest £600m to build electric Mini models at its Oxford plant and Tata’s plans to build a £4bn factory in Somerset. Battery factory.

Adam Forsyth, head of research at Longspur Capital, which provides equity research for clean energy companies, said if the UK delays net zero emissions measures, many businesses investing in green solutions will shift their attention elsewhere. “If there is business to be done, no one will look past the UK, but the focus will be where the opportunities are greatest,” he said.

America’s landmark Inflation Reduction Act, which includes $369 billion in subsidies and tax credits to combat climate change, is luring businesses to the United States. The European Union, Australia and Japan are trying to follow suit.

Emma Pinchbeck, chief executive of British Energy, said: “Changing the target could damage investment in the UK.”

There are concerns that delays will hinder consumer acceptance of the technology, whether it’s electric cars or electric heat pumps.

Conservative MP Chris Skidmore, who launched a formal review of net zero emissions earlier this year, told the Financial Times that the watering down of the target would remove the need for companies to seek to develop better, cheaper Great power for electric heat pumps. “This could be the end of the heat pump industry in this country,” he said.

But Mike Foster, chief executive of boilermakers trade group the Energy and Utilities Alliance, welcomed a possible delay in banning off-grid oil-fired boilers.

“We had called for a ban .

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