Ford calls for incentives to buy electric cars as backlash grows

Ford UK has called on the government to introduce incentives to encourage drivers to buy electric vehicles (EVs) as an industry backlash grows over sales targets.

Lisa Brankin, Ford UK’s chair and managing director, told the BBC that without demand, a government mandate to produce and sell more EVs “just doesn’t work”.

The comments add to a growing row between the government and the industry over the sale of new petrol and diesel cars being phased out over the next few years.

On Tuesday, Stellantis, the owner of Vauxhall, said it would close a plant in Luton, putting 1,100 jobs at risk, partly due to the EV targets.

Business Secretary Jonathan Reynolds told the House of Commons on Wednesday that Stellantis’s decision was “a dark day for Luton”.

It joins Ford in axing UK jobs. Last week, it announced it will cut 800 jobs in the UK over the next three years, partly due to the EV target but also because of increased competition.

Ms Brankin told BBC Radio 4’s Today programme: “The one thing that we really need is government-backed incentives to urgently boost the uptake of electric vehicles.”

She said Ford has invested “significantly” in the production and development of EVs, with “well over” £350m put into electrification in the UK.

“So we kind of need to make it work,” she said.

Both firms have previously raised doubts about their future in the UK because of other factors, separate to EV targets.

Ford closed its Bridgend factory in 2020, axing 1,644 jobs, citing Covid-19 as one of the reasons while Vauxhall’s former owner suggested in 2019 that Brexit threatened its Luton factory.

Meanwhile, some analysts have said a shift towards luxury vehicles and away from cheaper models are also part of the reason for Ford’s problems.

Reynolds blamed the previous government for Stellantis’ Luton closure, saying Labour had “inherited a position of extreme frustration”.

He said there would be a “fast track” consultation of how the EV targets are enforced, but reiterated Labour’s commitment to a 2030 phase-out of new petrol and diesel vehicle sales.

However, shadow business secretary Andrew Griffith said the 2030 target was a “jobs killer” and that Stellantis’ decision was “the direct result of a government policy that is simply unworkable for industry”.

The previous Conservative government moved the deadline for the phase-out from 2030 to 2035, but it kept penalties for non-compliance.

Under the current mandate, a percentage of the cars that companies sell must qualify as zero-emission.

EVs must make up 22% of a company’s car sales and 10% of its van sales this year.

For every car sale outside of that, firms must pay a £15,000 fine.

That target is set to rise to 28% for cars and 16% for vans in 2025. The rules will then get tougher every year ahead of a complete ban of new petrol and diesel car sales.

Labour has said it intends to reinstate the 2030 target as part of its wider commitments to climate change policy, but it will consult on how the “direction of travel” for the policy will work.

There are flexibilities in the current system, allowing manufacturers that can’t meet the targets to buy “credits” from those that can.

In practice, this means firms could buy credits from companies such as Tesla or Chinese firm BYD, which build electric models exclusively.

Manufacturers argue that demand for electric cars has not been as high as was expected when the rules were drawn up.

As a result, to avoid fines, they say they are having to discount new vehicles heavily, or subsidise rivals that only build electric cars, none of whom have a manufacturing base in the UK.

Sales of electric cars have, however, been increasing. In October, they made up one out of every five cars registered. However, industry sources insist this is largely down to unsustainable discounting.

Reynolds told an industry audience at a dinner hosted by Society of Motor Manufacturers & Traders (SMMT) on Tuesday he is “profoundly concerned” about the way zero-emissions policies currently operate.

“I don’t believe the policies that we have inherited, and I mean specifically in relation to zero emission vehicles, are operating today in a way anyone intended them to,” he said.

He and Transport Secretary Louise Haigh met car firms last week to discuss the EV rules.

A number of options have been suggested, such as allowing sales credits to be transferred between cars and vans and giving “credits” for British-made EVs sold abroad.

The SMMT has called for urgent government intervention to safeguard the sector, warning that weak demand for electric cars and the requirement to fulfil sales quotas had “the potential for devastating impacts on business viability and jobs”.

Nissan, which builds EVs at its plant in Sunderland, has said at the time the rules are “undermining the business case for manufacturing cars in the UK, and the viability of thousands of jobs and billions of pounds in investment”.