Carmakers are postponing investment decisions for UK factories until the government relaxes electric vehicle (EV) sales rules, according to the Society of Motor Manufacturers and Traders (SMMT). Mike Hawes, the SMMT chief executive, stated that manufacturers with existing UK operations are considering new model production but have yet to commit due to the current regulations.
Key Details
The UK car industry is urging the Labour government to ease the zero emission vehicle mandate, which requires an increasing percentage of electric cars sold each year until 2030. Jonathan Reynolds, the newly appointed business secretary, has suggested that the government may consider modifying the mandate.
They’re waiting for the mandate, certainly,
Hawes said, emphasizing the need for clarity on the rules before making significant investments.
The British automotive sector faces heightened competition from China and challenges from U.S. tariffs, alongside rising costs associated with transitioning to electric technology. Production figures from the SMMT indicate that UK vehicle output fell by 7.5% in the first half of 2026 compared to the same period in 2025, with 386,000 cars and commercial vehicles produced. Environmental groups have expressed concern over any potential easing of the mandate, warning it could lead to increased carbon emissions.
Background
While specific companies were not named by Hawes, potential candidates for delayed investments include Toyota, which produces the Corolla in Derbyshire, and Mini, which has postponed electric model production at its Oxford facility. Nissan is reportedly in discussions to manufacture a vehicle at its Sunderland plant for the Chinese company Chery, but no final decisions have been made.
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The delay in investment decisions could impact the UK automotive sector, particularly affecting stocks of manufacturers reliant on domestic production. Easing the EV mandate may lead to increased production costs and a slower transition to electric vehicles, influencing market sentiment.
Investors will watch for any official announcements regarding changes to the zero emission vehicle mandate in the coming weeks, which may clarify the future direction of the UK automotive industry.