Ford May Limit UK Petrol Sales, Aims for EV Quotas

Key Takeaway

• Ford may limit UK petrol model sales to meet EV quotas, reflecting challenges in aligning with the UK's 22% EV sales target for this year.
• Despite aiming for an all-electric fleet by 2030, consumer demand leads Ford to consider continuing hybrid models into the next decade.
• The UK's £15,000 fine per non-compliant vehicle underscores the financial and regulatory pressures on automakers to accelerate EV adoption.

Adjusting to EV Targets

Ford is navigating the complex landscape of transitioning to electric vehicles (EVs) in the UK, with its European boss, Martin Sander, indicating a potential shift in strategy due to the country's ambitious EV targets. The UK's adoption of a China-style quota system mandates that EV sales constitute 22 percent of new car sales this year, with the percentage increasing annually until 2030. However, with EV sales currently below 17 percent of new car sales in the UK, Ford is considering limiting the sale of petrol models to avoid hefty fines and potentially raising prices for consumers. Sander's remarks at the Financial Times' Future of the Car Summit in London underscore the challenges automakers face in aligning production and sales strategies with regulatory requirements.

Market Dynamics and Consumer Preferences

The transition to electric vehicles is influenced by consumer demand, pricing, and the availability of charging infrastructure. Sander pointed out that the pace of adopting EVs in Europe is ultimately determined by consumer preferences, noting that demand for EVs is currently below Ford's expectations. This situation has led to a reassessment of Ford's goal to sell only electric cars in Europe by 2030, with Sander describing the original target as "irrelevant" given the current market dynamics. The company is prepared to continue offering hybrid models into the next decade, reflecting a pragmatic approach to meeting emissions targets while accommodating consumer demand.

Regulatory Challenges and Industry Response

The UK's EV sales quotas and CO₂ emissions targets present a regulatory challenge for car manufacturers, compelling them to accelerate the shift towards electric vehicles. The potential for fines, set at £15,000 per vehicle that misses the targets, adds financial pressure to comply. However, UK transport decarbonisation minister Anthony Browne expressed optimism about the growth of the EV market, citing the entry of cheaper electric cars from established and new Chinese brands as a factor that could stimulate demand. Meanwhile, Peugeot's chief executive, Linda Jackson, echoed the industry's commitment to meeting these targets, emphasizing the necessity of transitioning to electric vehicles from both an ethical and business perspective.

Management Quotes

• Martin Sander, Ford's European boss:

  "We can’t push EVs into the market against demand. We’re not going to pay penalties. We are not going to sell EVs at huge losses just to buy compliance. The only alternative is to take our shipments of [engine] vehicles to the UK down and sell these vehicles somewhere else." "I don’t know if consumers in the UK would like seeing [engine vehicle] prices going up." "Demand is behind our expectations now and we are not hitting our ambitious targets. Everyone is getting extremely nervous." "It’s irrelevant if [the EV-only date] is going to be in 2030 or 2035. The trajectory is clear." "We are committed to zero emissions ... We just need to be reasonable about it and together find a way to manage to get to net zero in a profitable way."

• Linda Jackson, Peugeot chief executive:

  "As a manufacturer we have to meet it. There is no way that we will pay penalties, not from an ethical point of view nor from a business point of view."