Carmakers Delay UK Factory Investments Amid Calls for Eased EV Sales Rules
The Society of Motor Manufacturers and Traders reports that car manufacturers are postponing investment decisions in UK factories until electric vehicle sales regulations are relax
By The Guardian
Carmakers are postponing final decisions regarding investments in UK factories due to the current electric vehicle sales regulations, according to Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT). Hawes noted that while companies with existing operations in the UK are considering the production of new models, they have not yet proceeded with these plans.
The automotive industry is advocating for a relaxation of the zero emission vehicle mandate, which requires manufacturers to progressively increase the share of electric vehicles sold each year until 2030. The British car industry has been pressing the Labour government to ease these regulations.
Business Secretary Jonathan Reynolds has suggested that the government may consider diluting the mandate. Hawes indicated that manufacturers are awaiting clarity on this issue before making significant investment decisions. "They’re waiting for the mandate, certainly," he stated, highlighting the need for a resolution to facilitate investment in next-generation models.
The push for regulatory changes comes as the UK car industry faces challenges from competition with China, US tariffs, and the rising costs associated with electric vehicle technology. According to SMMT data, UK vehicle production decreased by 7.5% in the first half of 2026 compared to the previous year, with a total of 386,000 cars and commercial vehicles produced.
The electric car charging sector has expressed strong opposition to any modifications to the current rules, while environmental advocates have raised concerns about the potential increase in carbon emissions resulting from a relaxed mandate.
Although Hawes did not specify which companies are awaiting regulatory changes, potential candidates include Toyota, which has been manufacturing the Corolla in Derbyshire since 2019, and Mini, which has delayed plans to produce electric models at its Oxford plant. Nissan is reportedly in discussions to manufacture a vehicle at its Sunderland plant for the Chinese manufacturer Chery, although no final decision has been reached.
Other factors influencing investment decisions include the UK's trading relationship with the EU. If an agreement is not reached with Brussels, British car manufacturers could face tariffs on exports to their largest market unless they comply with rules regarding battery sourcing.
Hawes mentioned that the EU trading relationship is a priority for Reynolds, who has shown support for the automotive sector. In a recent interview, Reynolds acknowledged the likelihood of a dilution of the mandate to retain carmakers in the UK.