Nissan to warn jobs at risk as UK EV targets push car industry to ‘crisis point’

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Nissan plans to warn ministers that the UK car industry has reached a “crisis point”, with jobs and competitiveness at risk unless the government relaxes electric vehicle rules, according to two people with direct knowledge of internal discussions. 

EVs made up 18 per cent of new car sales in the UK in the first 10 months of the year, below the 22 per cent required under a government quota scheme.

Manufacturers can bridge the gap by buying credits from electric vehicle makers such as Tesla. However, next year the minimum EV level is due to rise to 28 per cent, which carmakers warn is too high to bridge with credits at a time of waning consumer demand, leaving them exposed to fines of £15,000 per vehicle.

“The reality is that the customer is not moving at the same pace as we had expected,” one person close to Nissan said. “A failure to do something about this within months would impact the industry to an extent where it will put jobs and economic growth at risk.” 

The comments come ahead of a meeting on Wednesday between transport secretary Louise Haigh and the automotive and charging industries to discuss the UK’s transition to EVs.

If the discussions do not yield concrete results, Nissan plans to escalate the issue by appealing to Sir Keir Starmer, underscoring rising tensions between the industry and the transport department.

Other carmakers have privately complained that they have not been able to hold one-on-one meetings with transport officials. One person said that the Department for Transport had been “tone deaf” to the issue, with industry concerns being rebuffed by ministers and civil servants.

The DfT said the government had been working closely with Nissan and had met the company twice over the last fortnight to discuss the zero-emission vehicle mandate. 

“Flexibilities are already in place for manufacturers, and we continue to support the switch to electric vehicles,” a spokesperson said. “We’ve also announced over £300mn in the Budget to support the transition, and a further £2bn to support the automotive manufacturing in the UK.”

Nissan is one of the largest automotive employers in the UK with more than 6,000 workers at its Sunderland plant, which supports another 30,000 jobs across the supply chain and where the company has invested £6bn. 

But the manufacturer has come under heavy pressure globally from slowing growth in EV sales, an outdated product line-up and falling demand in China, triggering emergency turnaround measures involving a cut of 9,000 jobs.

One person close to Nissan said the company was “petrified” of Chinese competition — a threat the Japanese group would struggle to contend with if it were hit with even higher emission target costs in the UK and the EU.

The UK’s zero emission vehicles (ZEV) mandate states that all new cars sold must be fully electric by 2035. But during the Budget, chancellor Rachel Reeves confirmed the government’s intention to bring forward the ban on the sale of new diesel and petrol cars to 2030, though a small number of hybrid sales will be permitted until 2035.

Growth in EV sales has slowed in other markets in Europe, prompting discussions on whether to spare carmakers from fines if they fail to comply with the EU’s emissions rules.

The UK market has held up better, with sales of new EVs rising 25 per cent in October from a year earlier, accounting for nearly 21 per cent of all car sales.  

But industry officials say retail demand remains weak and the annual targets will become much harder to meet from next year, when the 28 per cent rule lands.  

Carmakers remain divided, though, on how the government should relax the target, with some calling for a pause in the ZEV mandate while others prefer smaller fines and more subsidies to boost consumer demand. 

Environmental groups say the EV targets should be maintained since carmakers can still meet them by buying credits. Companies are also given credit for significant reductions in their own overall carbon emissions.