UK Carmakers Delay Factory Investment as Industry Awaits EV Rules Decision
Manufacturers say uncertainty over electric vehicle sales targets is delaying investment decisions on future UK production.
By The Guardian
UK car manufacturers are delaying decisions on investing in new factory production while they await greater certainty over the Government's electric vehicle sales rules, according to the Society of Motor Manufacturers and Traders (SMMT).
Mike Hawes, the organisation's chief executive, said companies with existing UK operations are considering where to build future vehicle models but are holding back from committing investment until there is more clarity over the Zero Emission Vehicle (ZEV) mandate.
The rules require manufacturers to increase the proportion of electric vehicles they sell each year as part of the UK's transition away from new petrol and diesel cars. The automotive industry has called for greater flexibility, arguing that current market conditions are making the targets difficult to achieve.
Business Secretary Jonathan Reynolds has indicated the Government is considering changes to the policy, prompting manufacturers to wait for a decision before committing to major investment in next-generation vehicles.
The sector continues to face wider challenges, including increasing competition from Chinese manufacturers, the cost of developing electric vehicles and uncertainty surrounding international trade. Official industry figures show UK vehicle production fell by 7.5% during the first half of 2026 compared with the same period last year.
Manufacturers are also seeking greater certainty over future trading arrangements with the European Union, particularly around rules governing battery sourcing, which could affect tariffs on vehicle exports.
While no individual manufacturers have confirmed that projects are on hold because of the mandate, Hawes said the industry is looking for a stable long-term policy framework before making significant investment decisions.