Analysis: why FCA is paying Tesla
From a UK perspective, however, what’s crucial is that - for as long as we remain in the EU and are negotiating our withdrawal - we are part of an European average figure, so manufacturers can offset our figures (127.9g/km last year) against those of other countries, such as electric car loving Holland and Norway, or small car loving Italy.
Potential disaster looms for 2021, however, when PM Boris Johnson has vowed our agreement to leave the EU will be enshrined. While current evidence suggests Johnson is not, as promised, dead in a ditch, and therefore his avowed timelines should be treated with caution, it is causing considerable concern among industry insiders that at that point the UK would mirror the EU’s legislation, but in isolation.
In other words car makers present in the UK market would have to hit the 95g/km target in the UK alone - or face the same fines as they will for their European-wide sales. And, before anyone says it, Brexit is not about to let them off the hook: no UK government is about to backtrack on environmental targets, and this one has already agreed to mirror EU rules on this point.
Admittedly - and necessarily - crude maths by the Society for Motor Manufacturers and Traders (SMMT) has suggested that to hit that target BEV registrations would have to rise from 1.6% to 27% of the market, or alternatively-fuelled vehicle registrations from 7.4% to 56% of the whole market, assuming petrol and diesel registrations remained constant. Even at today’s exponential growth in interest in electrified cars, and with the multiples of more vehicles being offered, that seems at best optimistic.
Potentially, there will be mayhem.
Already we know that battery supply issues have delayed many EV orders. While that pressure is set to ease, it’s clear that manufacturers will have to steer available cars to markets to juggle the need to avoid fines and maximise profitability.
While the former could boost the UK’s chances of getting stock, the latter is less sure, as exchange rates rollercoaster and the ongoing level of subsidy available to stimulate public interest in electrified vehicles is uncertain. Then there’s the threat of 10% trade tariffs on imported cars being imposed once we’re out of the EU to factor in.
While there is some time for the full picture to unfold, let’s not forget that this is an industry that operates on paper thin margins. In a perfect storm, it’s quite feasible that the logistical complexities and potential fines could tip UK arms of car makers into the red - as could a need to sell less SUVs, which are famously more profitable than hatches and saloons, or to take more polluting but more profitable performance cars off sale.
At best, car buyers are likely staring down the barrel of having less choice of models.
But it wouldn’t take a huge leap of imagination to envisage some manufacturers deciding that the UK market just isn’t worth the hassle.
Car makers have come and gone in the past of course, with the barely lamented Infiniti and Chrysler springing to mind, but it would be a crying shame if any were forced to step away not because of lacklustre product, but rather stringent regulation.