PolicyLens

Methodology note

Repeal the ZEV mandate: calculation note

Scenario assumptions behind the Repeal the ZEV mandate estimate. The figures are illustrative and exclude unrelated Conservative pledges.

View main policy page: Repeal the ZEV mandate

Central fiscal result

-GBP 0.2bn - Net fiscal impact in 2028-29

Low case: -GBP 1.0bn. High case: +GBP 2.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

  • Model repeal of ZEV sales targets by 2028-29.
  • Central fiscal effect is small and slightly saving-positive.
  • Baseline is existing vehicle emissions trading schemes.
  • Fuel-duty and oil-licensing changes are separate policies.

Affected population

  • Affected population is vehicle manufacturers, dealers and car buyers.
  • Direct exposure includes new car and van markets.
  • Indirect exposure includes charging, battery and fuel supply chains.
  • Fiscal effects are secondary to investment effects.

Gross impact

  • Central fiscal saving: GBP 0.2bn from lower support needs.
  • Penalty receipts and emissions costs are uncertain.
  • High case assumes higher support needed later.
  • No consumer welfare estimate is scored.

Fiscal build-up, central case

  • Lower EV support spending: -GBP 0.3bn
  • Lost penalty and scheme receipts: +GBP 0.1bn
  • Administration savings: -GBP 0.1bn
  • Future compliance costs: +GBP 0.1bn

Central net impact: -GBP 0.2bn in 2028-29.

Behaviour and pass-through

  • Low case assumes repeal reduces subsidy needs and compliance costs.
  • Central case assumes small fiscal effect with mixed behavioural responses.
  • High case assumes delayed transition raises future support costs.
  • Manufacturers may still follow global EV trends.
  • Consumer prices may fall near term but fuel use rises.

Phasing

  • 2026-27: GBP 0.0bn. Preparation or partial implementation.
  • 2027-28: -GBP 0.1bn. Main ramp-up year.
  • 2028-29: -GBP 0.2bn. Target-year central estimate.
  • 2029-30: -GBP 0.2bn. Continuation at steady-state assumptions.

Main source groups

  • con-plan-2026: Conservative live policy page; used to identify current pledge wording.
  • zev-cost-benefit-2023: DfT ZEV appraisal; official costs and benefits of mandate.
  • zev-compliance-2026: DfT ZEV compliance report; scheme implementation evidence.
  • obr-efo-mar-2026: OBR March 2026 forecast; fiscal and macro baseline.
  • aghion-et-al-2016: Clean innovation direction; informs behavioural and incidence assumptions.
  • goulder-parry-2008: Environmental policy design; informs behavioural and incidence assumptions.