Carmakers are postponing final investment decisions for their UK factories, awaiting a relaxation of electric car sales regulations. Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), stated that companies with existing UK operations are considering new models but have held back.
The British car industry has pressed the Labour government to ease the zero emission vehicle mandate. This mandate compels manufacturers to sell a growing proportion of electric cars annually until 2030. Business Secretary Jonathan Reynolds has indicated that the government is likely to dilute the mandate.
Hawes confirmed that manufacturers are waiting for a resolution and an easing of the mandate for investment decisions on next-generation models. This comes as the industry faces challenges including competition from China, US tariffs, and the costs of investing in electric technology. UK vehicle production decreased by 7.5% in the first half of 2026, with 386,000 cars and commercial vehicles produced, according to SMMT figures published today.
The electric car charging industry has opposed further changes to the rules, while environmental campaigners have expressed concern over the potential for increased carbon emissions. Other factors influencing carmakers' investment decisions include Britain's trading relationship with the EU, particularly regarding potential tariffs if batteries are not sourced from within Europe.