Jaguar Land Rover has suggested it might scale back production due to government plans to fine vehicle manufacturers for not meeting electric vehicle (EV) targets.
Car makers face fines for not selling a certain number of EVs as an increasing percentage of total sales over time under the government's proposed Zero Emission Vehicle Mandate, which comes into effect in 2024.
Jaguar, which is owned by Tata Motors, warned this could force it to rethink its plans to become an electric-only brand by 2025, however, as it would have to account for higher spending.
“If we have to suddenly pay fines, there would be a significant financial impact to us, which would damage the plans that we have in place,” an industry source said to the Sunday Times.
Manufacturers could avoid fines by purchasing carbon credits, which aim to offset emissions, from other car firms, including Tesla Inc (NASDAQ:TSLA).
Ministers were warned that this could see Tesla and other firms that sell the credits make huge profits at the expense of UK EV companies.
The scheme would likely see manufacturers have to meet a 22% target of all sales by next year, with this figure rising to 52% in 2028, based on the government's model that 80% of car sales will be low-carbon options by 2030.
“For the CO2 emissions element, there would need to be scaled fines based on the number of vehicles sold and how much the target has been missed by,” it said.
This would precede the ban on new diesel and petrol cars due for the same year, but the government is yet to give the mandate the final go ahead.
Trade body SMMT chief executive Mike Hawes called for more clarity over the government plans though, stating: “If this regulation is to deliver the market transition Government wants, the industry needs that detail for product planning, and consumers need the confidence to switch.”
EV sales have rocketed in recent years, surpassing diesel cars in the UK for the first time last year.
As of December 2022, around 660,000 battery EV’s were registered in the UK, up from 206,000 in 2020 and 40% more than were in 2021, according to data website Zap Map.