What Is the ZEV Mandate and How Does It Affect Car Prices?

The Zero Emission Vehicle (ZEV) Mandate is a legal requirement that sets annual targets for the proportion of zero-emission vehicles in each manufacturer’s UK new car sales. In 2026 the target is 33% for cars and 24% for vans. Manufacturers that miss the target face fines of £12,000 per non-compliant car sold over their allowance. To avoid those fines, manufacturers are discounting EVs heavily and quietly raising petrol and diesel car prices to compensate. The result is that the ZEV Mandate is reshaping prices across the entire new car market, not just in the EV segment.

What exactly is the ZEV Mandate?

Introduced under legislation that underpins the UK’s 2030 new petrol and diesel car ban, the ZEV Mandate requires each manufacturer selling cars in the UK to register a minimum percentage of zero-emission vehicles each year. The targets are set car by car, not across the whole industry, so a manufacturer with a largely petrol-focused range faces a more difficult compliance challenge than one that already sells a broad EV lineup.

Manufacturers can also trade ZEV credits between themselves: a brand that over-achieves its target can sell surplus credits to one that has fallen short. This creates a secondary market in ZEV credits alongside the primary car market.

What are the targets?

Year	Car ZEV target	Van ZEV target
2024	22%	10%
2025	28%	16%
2026	33%	24%
2027	38%	30%
2028	52%	38%
2029	66%	50%
2030	80%	70%
2035	100%	100%

The trajectory is steep. The jump from 52% to 66% between 2028 and 2029 is the sharpest single-year increase in the car targets. Manufacturers are planning their model launches, production schedules and pricing strategies around these steps.

Note that actual UK EV market share in 2025 was around 23% of new car registrations, falling short of that year’s 28% target. That gap drove aggressive industry discounting and is likely to persist into 2026 given the higher 33% target.

What is the fine for missing the target?

Manufacturers that fail to meet their ZEV target face a fine of £12,000 for each non-compliant car registered above their permitted allowance. Some earlier guidance placed the fine at £15,000; the operative rate under current legislation is £12,000 per car. For a large manufacturer selling 100,000 cars per year in the UK, missing the target by even five percentage points could mean a fine of tens of millions of pounds.

In practice, most manufacturers have been discounting EVs aggressively to drive sales volume rather than absorb fines. In 2025, the average discount on a new EV across the industry was around £11,000. Collectively, UK EV buyers received an estimated £10 billion in discounts from manufacturers trying to hit their ZEV targets.

How does the ZEV Mandate affect car prices?

The mandate has two clear price effects:

EVs become cheaper than their natural market price. Manufacturers need EV sales for compliance reasons, so they are prepared to discount below normal profit margins. Deals that would never exist in a free market are appearing because the alternative is a £12,000 fine. This is the primary driver behind many of the zero-deposit PCP deals, high-value part-exchange bonuses and very competitive personal contract hire rates on EVs that UK buyers have seen since 2024.

Petrol and diesel cars become more expensive. This is the part most drivers have not noticed yet, but it is real. Volkswagen’s UK sales leadership acknowledged publicly in early 2026 that petrol car list prices would need to rise to cross-subsidise EV discounting. If a manufacturer is selling an EV at a loss to hit its ZEV target, it must recover those costs somewhere. The simplest mechanism is to quietly increase the price of petrol and diesel models, where demand is less elastic and buyers have fewer alternatives. Analysis by Autocar found that several manufacturers had already raised ICE car prices in late 2024 and early 2025 for exactly this reason.

Does the ZEV Mandate also cover vans?

Yes. Van manufacturers face their own separate set of targets starting at 10% in 2024 and rising to 70% by 2030. The van targets are lower than car targets in percentage terms because the van market’s electrification is at an earlier stage, with fewer affordable long-range electric vans available at commercial scale. The Plug-in Van Grant (up to £5,000 for large vans) supports adoption alongside the mandate.

What happens if a manufacturer misses its target by a lot?

Beyond fines, a manufacturer that repeatedly misses its target risks losing its ability to sell in the UK market at scale, since the ZEV Mandate is backed by regulation rather than voluntary agreement. In practice, most manufacturers are making strategic choices to meet targets rather than absorb fines: launching more EV models, offering deeper discounts, buying ZEV credits from other manufacturers, or in some cases delaying launches of new petrol models.

There is also a “banking” mechanism: manufacturers that over-deliver in earlier years can carry credits forward to offset future shortfalls. This gives brands with a strong early EV performance (such as Tesla, whose entire range is zero-emission) a structural advantage.

What does the ZEV Mandate mean for buyers in 2026?

For anyone buying an EV in 2026, the mandate is working in your favour. Manufacturers need your sale more than you need them, which creates genuine negotiating power and means advertised deals are not necessarily the floor.

For anyone buying a petrol or diesel car, be aware that list prices are under quiet upward pressure. Manufacturers are less motivated to discount ICE models when doing so would increase their ZEV compliance gap.

For anyone planning to buy an EV in 2027 or 2028, the window of maximum manufacturer desperation is now. As EV market share rises and manufacturers get closer to their targets naturally, the need to discount aggressively will reduce. The £11,000 average EV discount seen in 2025 is unlikely to persist in its current form through the end of the decade.

What about the 2030 petrol and diesel ban?

The ZEV Mandate is the mechanism that makes the 2030 ban manageable. Rather than a cliff edge in January 2030, the annual stepping targets force manufacturers to build their EV capacity incrementally. By 2030, when new petrol and diesel car sales must stop, the industry will have spent six years meeting progressively higher ZEV targets. The 80% target in 2030 means only 20% of new car registrations can be ICE-powered in that year.

For a detailed look at what the 2030 ban means in practice, see our article on what the 2030 petrol and diesel ban actually means.

What should you take away?

The ZEV Mandate is the single most powerful force shaping UK new car prices in the mid-2020s. It is making EVs artificially cheap relative to their manufacturing cost and petrol cars quietly more expensive. If you are in the market for a new car, understanding this dynamic helps you time your purchase and negotiate effectively.

For the full range of EV grants and incentives, see our overview at the grants, policy and legislation hub. For the best-value EVs currently on sale, including those benefiting most from ZEV Mandate discounting, see our guide to best value EVs that qualify for UK grants.