The news stories that shaped the car industry this year

When Volvo made its announcement, the company’s then deputy CEO, Björn Annwall, told Autocar: “If we want to be consistent with the strategy that we believe we’re going to be fully electric but we accept that it takes longer, [then] keeping the existing cars alive a little bit longer could make sense.”

This was echoed by Marin Gjaja, chief operating officer of Ford’s Model E electrification division, who argued: “I don’t think we can go all in on anything until our customers decide they are all in, and that is progressing at different rates around the world.” He added that the brand’s previous target had been “ too ambitious”.

This, of course, made adhering to stricter emissions regulations, such as the UK’s zero-emissions vehicle (ZEV) mandate and similar laws about to be launched in the EU, even harder for car makers. The upshot was manufacturers limiting ICE car sales in order to hit these targets.

Tariff turbulence

While all of this was going on, the same European car makers were squabbling with law makers over how to deal with growing sales of China-made EVs. The likes of MG and BYD were claiming chunky market shares by undercutting rivals on price, largely thanks to production costs being heavily subsidised by the Chinese state

The European Commission’s solution was to impose large import tariffs on all electric cars made in China. BYD and Geely were taxed at 17% and 18.8% respectively, while MG owner SAIC was slapped with the highest rate of 35.3%, on top of the 10% it already paid.

Even Western car makers operating in China were affected. Among them, BMW, which makes cars such as the iX3, Mini Cooper EV and Aceman in the country, and Renault (Dacia Spring), were both hit with an additional 20.7% duty. 

Geely-owned Volvo announced plans to further increase European production of some EVs in future, partly in order to avoid the tariffs. Tesla, which has a factory in Shanghai, escaped with a lower 7.8% rate due to its subsidies in China being lower than those of its rivals.

These tariffs will last for at least five years, having been ratified in November after a trial period. Although the move was intended to level the playing field for European car makers, several of the industry’s leading firms have railed against the introduction of tariffs.

Skoda sales chief Martin Jahn told Autocar: “We don’t think tariffs can solve the situation.” Renault CEO Luca de Meo said it was time to “find a deal” with China’s car industry before an all-out trade war erupted.

China is duly looking to respond, by throttling European car makers’ supply in the region, and the effects are already being felt by a struggling Volkswagen Group. The owner of Audi, Bentley and Porsche reported a decline in pre-tax profits of £2.75 billion, with “difficult decisions” to be made to balance the books, including the possibility of heavy job cuts. Along with rising fixed costs (including electricity and wages), a 10% drop in sales in China, one of its biggest markets, hit the company hard.

The cheap car returns

Until recently, EV development had centred on large, premium cars as manufacturers sought to maximise the return on their early investment and recoup the much higher production costs of electric vehicles. 

But as EV demand stalled and emissions rules bit, the need for a focus on the development of small, cheaper EVs became clear.

Chinese car makers had already shown it could be done with the likes of the sub-£25,000 MG 4, which was the catalyst for the firm’s revenues reaching £1.3bn last year.

Of course, it would be up to others to see whether profits could be made from small electric cars without production being subsidised by the state.

In March, with Europe’s car brands on the back foot, de Meo went on the offensive and decried Europe’s regulations as “objectively favouring premium models”. He called on the authorities to help redress the balance by actively promoting the development of affordable cars again.

Nothing from governments was forthcoming, but the Renault Group ploughed ahead anyway and launched the Dacia Spring, a bare-bones EV offering 137 miles of range with a headline-grabbing £14,995 entry price.

Crucially, it was the cheapest electric car in Europe – but notably one that is built in China, making it a more viable business proposition.

Even with the 20.7% import tariff, there are no plans to move production to Europe.

Renault has since followed it with the made-in-France 5, priced from £22,995, and Volkswagen is readying both a sub-£25,000 ‘ID 2’ and sub-£20,000 ‘ID 1’.

New Government

This year also brought a change in government, ending 14 years of Conservative rule. Come October, there was a lot riding on new chancellor Rachel Reeves’ autumn budget, but it turned out the answers to many crucial questions weren’t hiding in her shiny red briefcase.

As part of its election manifesto, Labour promised a host of car-and driver-focused pledges, including to reinstate the 2030 ban on new ICE cars (with some hybrids allowed until 2035) to provide “certainty” for car manufacturers that really didn’t know which cars they would be able to sell when we entered the next decade. 

It also pledged to lower soaring insurance costs and help EV buyers by increasing the number of charging points, as well as introducing a battery health standard to promote the uptake of second-hand EVs.

Yet October’s autumn budget proved something of an anticlimax, and despite major lobbying efforts from the automotive industry’s main players, no buying incentives were introduced for electric vehicles. 

Calls were made to delay the planned roll-out of vehicle excise duty on electric cars from 1 April 2025 onwards, in part because their higher list prices meant a disproportionate number of EVs would be hit by the £40,000 luxury tax threshold. 

Instead, the government brought parity the other way by doubling VED for most new combustion-engined cars. Elsewhere, fuel duty was again frozen for another 12 months.

ZEV difficulties

At the time of writing, the ZEV mandate debate has taken quite a turn. For one, Stellantis cited it as the reason for proposing to close its Luton van factory. 

CEO Carlos Tavares had previously threatened this outcome and branded the policy a “terrible thing for the UK”.

Hours later, the government confirmed it may redraw the ZEV rules. Business secretary Jonathan Reynolds said he was “concerned” by how the current “inherited” laws “are working at the moment”.

The debate has raged for most of 2024, with car makers struggling to hit this year ’s 22% EV sales mix target, despite big fines. 

Next year’s 28% target looks especially daunting. Indeed, ICE sales are now being suppressed in pursuit of the target, adding to the rising disruption. The industry will welcome these latest comments, but is the change of tone from the government too little, too late.