2.7 million families saddled with £1,600 ‘petrol premium’ if EV policy weakened

Analysis by the Energy & Climate Intelligence Unit (ECIU) has found a potential weakening of the Zero Emission Vehicle (ZEV) mandate could significantly increase the cost of driving for millions of families across the UK. A two-year delay to the policy, followed by a slower increase in EV sales, could ultimately result in 2.7m fewer second-hand EVs being available in the years ahead. [1]

This would leave millions of drivers paying £1,600 [2] a year more to run a petrol car than an EV, with the extra costs incurred by them adding up to around £40bn.

80% of car sales in the UK take place on the second-hand market [3] – and upfront costs of second-hand EVs are now comparable to petrol equivalents [4]. New cars are generally sold on after just 3-4 years, so the speed at which new EVs are sold is critical to the growth of the second-hand EV market. In its first year, the ZEV mandate has been successful in driving up sales of new EVs as manufacturers competed to hit their targets by lowering prices.

Colin Walker, Head of Transport at the Energy & Climate Intelligence Unit (ECIU), said: “Families seeking to lower their driving bills by getting their hands on a cheap-to-run second-hand EV could be left stuck paying a £1,600 a year petrol premium simply because there aren’t enough electric cars to go round.

“The ZEV mandate, introduced by the last Government and continued by the current one, has been incredibly successful at driving competition up and prices down leading to hundreds of thousands of new EVs on UK roads.

“The UK is Europe’s largest EV market, beating the likes of Germany at making the shift to cheaper and cleaner electric driving. Parts of the car industry are pushing to slow the ZEV mandate, but doing so could not only leave millions of families worse off, but stall investment in charging infrastructure and cost the UK hundreds of thousands of jobs as we fall behind in the global race to build a car industry fit for an electric future.“

EV sales increased by over 21% in 2024 on 2023, with the ZEV mandate targets having been met in their first year [5]. However, parts of the car industry are lobbying for the mandate to be weakened [6]. Were the Government to bow to this pressure, and weaken the mandate, the competition between manufacturers would lessen, prices would increase, and sales would slow down. This in turn would reduce supply to the second-hand market, slowing its growth.

This would lower the number of households that would be able to get their hands on a second-hand EV, leaving them driving more expensive petrol and diesel cars for longer. Recent analysis from ECIU has found that the second-hand EVs can save their owners £1600 in ownership costs, with much of these savings being driven by the fact that second-hand EVs have reached price parity with their petrol equivalents. Demand for used EVs on Auto Trader in 2024 increased by 51%, with EVs the fastest-selling fuel type on retailer forecourts. [7]

The analysis found that by 2048 a weakening of the ZEV mandate could results in sales similar to the ‘lower option’ considered by the previous Government when designing the policy, resulting in 2.7m fewer EVs from entering the second hand market than would otherwise have been the case by 2048. This means that a total of around £40bn in extra motoring costs would have to be shouldered by millions of families across the UK, including some of the poorest. 

A recent report by CBI Economics, commissioned by the ECIU, revealed that a failure by the car industry to make the transition to manufacturing EVs could see its contributions to the UK economy fall by as much as 73%, or £34.1bn, and over 400,000 jobs could be lost. Conversely, economic output could increase by over £16bn, and 167,000 new jobs could be created, if a rapid and successful transition takes place. Government support is critical in avoiding such an outcome, and this includes the provision of a stable and supportive regulatory environment through keeping measures like the ZEV Mandate in place. [8]

ENDS 

Notes to editors

1. The analysis used recent results for the ‘petrol premium’ which is the difference in average annual total cost of ownership between the top-selling EVs and their petrol equivalents, over the ten years of second-hand ownership.  The number of second-hand EVs on the road in any given year was calculated under two scenarios, each of which lagged new car sales by 4years.  In both scenarios, total new car sales were assumed to be 2million units per year; in one scenario, the percentage of new EV sales followed the ZEV Mandate targets (including flexibility from improving the fuel efficiency of non-EVs in the first three years); and in the second scenario, new EV sales were set to 21% in 2025 and 2026 (which is the level in January 2025) to reflect calls from one manufacturer for a 2year moratorium on the Mandate, and which also matches the ‘low option’ in 2025 and 2026 in the previous Government’s consultation on the ZEV Mandate (issued in 2023), and this second scenario then follows this ‘low option’ that reaches 100% by 2035.  The second scenario has fewer sales on the way to 2035, and the cumulative difference in EV sales from 2025 to 2034 would be 2.7million.   The last of the EVs sold (or not) under by 2034 would end their second-hand lives in 2048, and the total TOC difference for the 2.7million EVs in question over their lifetimes would be over £40bn.
2. https://eciu.net/media/press-releases/2024/best-selling-second-hand-evs-saving-drivers-1-600-a-year
3. https://www.statista.com/topics/2190/the-uk-used-car-industry/
4. https://plc.autotrader.co.uk/news-views/press-releases/smmt-used-car-transactions-q1-2024
5. https://eciu.net/media/press-releases/2025/ev-targets-hit-in-first-year-analysis
6. https://www.autoexpress.co.uk/nissan/365102/nissan-calls-urgent-action-zev-mandate-and-warns-fines-risk-future-investment
7. https://plc.autotrader.co.uk/news-views/press-releases/commentary-2024-used-car-transactions/
8. £34bn loss: car industry could ‘crash’ if EV investment stalled: https://eciu.net/media/press-releases/2024/34bn-loss-car-industry-could-crash-if-ev-investment-stalled