Backing British business: Prime Minister unveils plan to support carmakers

British car brands like Rolls-Royce, Vauxhall, and Land Rover are being given certainty, stability, and support as the Prime Minister sets out plans to back industry in the face of global economic headwinds today (7 April 2025).

The Prime Minister will say the new era of global insecurity means that the government must go further and faster reshaping our economy through the Plan for Change.

The Zero Emission Vehicle Mandate will be changed to make it easier for industry to upgrade to make electric vehicles, while delivering the manifesto commitment to stop sales of new petrol and diesel cars by 2030, which will help even more British consumers access the benefits of cheap to run electric vehicles. 

The package will be backed by a modern Industrial Strategy, to be published in full this summer, which will help British businesses realise the potential of industries of the future.

The changes, which reflect extensive consultation, will help the car industry by:

• increasing flexibility of the mandate for manufacturers up to 2030, so that more cars can be sold in later years when demand is higher
• allowing hybrid cars – like the Toyota Prius and Nissan e-Power – to be sold until 2035 to help ease the transition and give industry more time to prepare
• continuing to boost demand for electric vehicles, on top of the £2.3 billion we're already spending on boosting British manufacturing and improving charging infrastructure – with a new charge-point popping up every half an hour
• pressing on with tax breaks worth hundreds of millions of pounds to help people switch to electric vehicles

Support for the car industry will be kept under review as the impact of new tariffs become clear.

This package is the latest in a series of pro-growth measures that the Prime Minister is announcing to counter the impact of new global headwinds and build a strong, resilient economy with more well-paid jobs.

Prime Minister, Keir Starmer, said:

Global trade is being transformed so we must go further and faster in reshaping our economy and our country through our Plan for Change.

I am determined to back British brilliance. Now more than ever UK businesses and working people need a government that steps up, not stands aside.

That means action, not words. So today I am announcing bold changes to the way we support our car industry.

This will help ensure home-grown firms can export British cars built by British workers around the world and the industry can look forward with confidence, as well as back with pride.

And it will boost growth that puts money in working people's pockets, the first priority of our Plan for Change.

Transport Secretary Heidi Alexander said: 

We will always back British business. In the face of global economic challenges and stifled by a lack of certainty and direction for too long, our automotive industry deserves clarity, ambition and leadership. That is exactly what we are delivering today.

Our ambitious package of strengthening reforms will protect and create jobs – making the UK a global automotive leader in the switch to EVs – all the while meeting our core manifesto commitment to phase out petrol and diesel vehicles by 2030.

Once again, the Prime Minister's decisive and bold actions show how we're on the side of British business while harnessing the opportunities of the zero emissions transition to create jobs and drive growth, securing Britain's future, and delivering our Plan for Change.

In recognition of the changing global trading landscape, the government has worked with the industry to both strengthen its commitment to the phase out and introduce practical reforms to support industry meet this ambition.

Demand for electric vehicles is already rising, with the latest data showing sales in March were up over 40% on last year, which will help with the transition.

There is a huge opportunity to be harnessed here – with the UK being the largest EV market in Europe. Over £6 billion of private funding is lined up to be invested in the UK's chargepoint roll-out by 2030. Since July, the government has also seen £34.8 billion of private investment announced into UK's clean energy industries.

The updated ZEV Mandate will ensure flexibilities support UK manufacturers by: 

• maintaining the existing phase-out dates and headline trajectories for cars and vans
• extending the current ability to borrow in 2024-26, to enable repayment through to 2030
• extending the current ability to transfer non-ZEVs to ZEVs from 2024-26, out to 2029, giving significant additional flexibility to reward CO₂ savings from hybrids – caps will be included to ensure credibility
• introducing a new flexibility by allowing for van to car transfer, i.e. 1 car credit will be exchanged for 0.4 van credits, and 1 van credit will be exchanged for 2.0 car credits 

The wide-ranging package of measures introduced today will also exempt small and micro-volume manufacturers – supercar brands including McLaren and Aston Martin – from the Mandate targets, preserving some of the UK car industry's most iconic jewels for years to come.

Vans with an internal combustion engine (ICE) will also be allowed to be sold until 2035, alongside full hybrids and plug-in hybrid vans.

Employing 152,000 people and adding £19 billion to our economy, the UK's automotive industry is a huge asset to our nation – and the transition to zero emissions is the biggest opportunity of the 21st century to attract investment, harness British innovation, and deliver growth for generations to come.

Owning and buying an EV is becoming increasingly cheaper, with drivers able to save £1,100 a year compared to petrol if they charge overnight at home. Half of used electric cars are sold at under £20,000 and 29 brand new electric cars are available from under £30,000.

The UK was also the largest EV market in Europe in 2024 and the third in the world with over 382,000 EVs sold – up a fifth on the previous year. There are now more than 75,000 public chargepoints in the UK – with one added every 29 minutes – ensuring that motorists are always a short drive from a socket.

Chancellor of the Exchequer, Rachel Reeves said:

The world is changing but we are determined to deliver for working people, protect their jobs and put more pounds in their pockets.

That is why we are backing British business and investing in industries of the future, including our car manufacturers.

Energy Secretary Ed Miliband said:

It is very important that the government has strengthened our commitment to our world leading EV transition plan.

This plan will benefit UK consumers by expanding the market for cars that are cheaper to run. And it will support our domestic manufacturing so we can seize this global opportunity.

Business Secretary Jonathan Reynolds said:

This pro-business government is taking the bold action needed to give our auto sector the certainty that secures jobs, drives investment and ensures they thrive on the global stage.

Our Industrial Strategy will back the country's high growth sectors, including advanced manufacturing, so we can grow the economy and deliver on the promises of our Plan for Change.