Business news and discussion on TalkFuse.
Carmakers ‘delaying investment in UK factories until EV sales rules relaxed’
Carmakers are holding back final investment decisions for their UK factories until the government relaxes rules requiring an increasing share of new car sales to be electric, according to Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT). Manufacturers with existing UK operations are weighing whether to build new models domestically but are awaiting an easing of the zero emission vehicle mandate before committing, a delay that matters because it threatens further stagnation in an industry already grappling with competition from China, US tariffs and the cost of switching to electric technology.
Business secretary Jonathan Reynolds has signalled the mandate, which runs to 2030, is likely to be watered down, though the electric charging industry and environmental campaigners oppose any weakening given the potential extra carbon emissions. UK vehicle production fell 7.5% in the first half of 2026 to 386,000 cars and commercial vehicles, SMMT figures published on Thursday show. Firms reportedly waiting on the decision may include Toyota, which builds the Corolla in Derbyshire, and Mini, which has postponed electric model plans at its Oxford plant, while Nissan is in talks over building a car for China's Chery at Sunderland and Jaguar Land Rover is preparing new models. Britain's future trading relationship with the EU, including battery sourcing rules and potential EU subsidy restrictions, also looms over investment decisions.
In short
- Carmakers delay UK factory investment pending relaxed EV sales mandate
- UK vehicle production fell 7.5% in first half of 2026
- Toyota, Mini, Nissan, JLR among firms awaiting policy clarity
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Relaxing the mandate could give manufacturers more time to manage the costly shift to electric vehicles while demand, technology and global competition remain uncertain. Supporters argue that clearer, more flexible rules may unlock investment in UK factories, protect jobs and sustain production during the transition.
The case against
Keeping the mandate could give manufacturers and investors a firm, predictable signal to develop electric models and supply chains in the UK. Opponents of weakening it argue that slower targets risk higher emissions and could delay the transition, while stable rules can encourage investment rather than leave firms waiting for repeated changes.
Explained simply
The UK requires car companies to increase the share of electric vehicles they sell each year, with targets becoming stricter until 2030. These rules are designed to push the industry towards cleaner technology. Manufacturers face financial penalties if they fail to meet the targets.
Switching to electric vehicle production is expensive and technically demanding. Car companies need to decide whether to build new models at their UK factories, but many want certainty about these rules before committing billions of pounds to investment. This uncertainty is slowing their decision-making.
The UK car industry is struggling, with production falling and competition from manufacturers abroad intensifying. If companies do not invest in new models here, the industry could decline further and lose jobs. Investment decisions also depend on other factors, including how Britain trades with the EU and the costs of sourcing batteries for electric cars.
Business Celebrity Entertainment UK World