Starmer eases electric vehicle targets as Trump tariffs heap pressure on car industry
A ban on producing new petrol and diesel cars will still start in 2030, but car manufacturers will face lower fines, and flexibility on sales targets, aimed to help them cope with the cost of the new tariffs. ITV News Political Correspondent Robert Peston explains.
Sir Keir Starmer has relaxed targets on some electric vehicles in the wake of US President Donald Trump's tariffs.
The government announced rules around fines for manufacturers who do not sell enough electric cars will be eased, and supercar firms will be exempt from the restrictions.
It comes after a 25% tariff on all foreign cars imported to the US came into force on Thursday, and a further 10% tariff on all British goods imported into America kicked in on Saturday morning.
As part of his announcement in the West Midlands, Starmer will reinstate the 2030 ban on the sale of new petrol and diesel cars.
But regulations around manufacturing targets on electric cars and vans will also be altered, to help firms in the transition, and carmakers will be able to sell new and plug-in hybrids for another five years until 2035.
Luxury supercar firms such as Aston Martin and McLaren will still be allowed to keep producing petrol cars beyond 2030, because they only manufacture a small number of vehicles per year.
Officials are also going to make it easier for manufacturers who do not comply with government-mandated sales targets to avoid fines, and the levies will be reduced.
The prime minister vowed to ensure "home-grown firms can export British cars”, adding that "we must go further and faster in reshaping our economy" because "global trade is being transformed".
The tariffs caused Britain’s FTSE 100 to fall sharply at Monday’s open, dropping 241.88 points, or 3%, within minutes of trading - fuelling fears of a global trade war.
Jaguar Land Rover, one of Britain's biggest carmakers, said it was halting its shipments to the US for four weeks from Monday, while it considers how to adjust to the tariffs.
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Speaking at Jaguar Land Rover in the West Midlands, Starmer told employees: “These are challenging times, but we have chosen to come here because we are going to back you to the hilt.”
He said the visit was a “statement of intent”, showing the government’s support for British carmakers.
The PM said tariffs are a “huge challenge” and that we are in a “completely new world”.
“But this moment has also made something very clear – that this is not a passing phase.
“Just as we have seen with our national security and defence, particularly over recent months in relation to the war in Ukraine, now with our commerce and trade, this is a changing and completely new world.”
Officials have said that support for the car industry will continue to be kept under review as the full impact of the tariffs announced last week becomes clear.
Transport Secretary Heidi Alexander told ITV News: "This is about protecting jobs, it’s about providing certainty to the industry so that British manufacturers can lead the way in the transition to electric vehicles".
The government had been consulting on these changes and facing pressure from car manufacturers to relax the rules on EVs for a while, but they're understood to have been brought forward in response to the tariffs.
A series of interventions is expected from the government this week, as Starmer pledged to shelter British businesses from the "storm" following Trump's tariffs.
On Sunday, the prime minister reiterated his disappointment over the tariffs in further calls with world leaders.
Downing Street said that the PM spoke to European Commission president Ursula von der Leyen, German Chancellor Olaf Scholz and leader of the German Christian Democratic Union party Friedrich Merz on Sunday.
A Downing Street spokesperson said the leaders agreed that following the additional tariffs announced by the US, they all agreed "this is a new era for the global economy".
“The prime minister reiterated that he was disappointed by the new tariffs and stressed he will continue to act in the UK’s national interest – remaining calm while preparing for all eventualities.
“He updated on his plans to go further and faster to strengthen the UK’s economy and ensure it is as resilient as possible and can withstand these kinds of global shocks. He added that it would be important for the UK to strengthen its trading relationships with others across the globe at the same time.”
Motoring industry body the Society of Motor Manufacturers and Traders (SMMT) has said that “greater action will almost certainly be needed” to safeguard manufacturers, given the tariff changes.
Chief executive Mike Hawes said that “given the potentially severe headwinds facing manufacturers following the introduction of US tariffs, greater action will almost certainly be needed to safeguard our industry’s competitiveness.
“UK-US negotiations must continue at pace, while the long-awaited industrial and trade strategies should prioritise automotive and be delivered at speed.”
The Conservatives have accused the Government of “firing on half cylinders” when support for car makers needs a “full throttle”.
Shadow business secretary Andrew Griffith said: “After nearly a year, Labour’s industrial strategy remains stuck on the grid and the Business Secretary and Chancellor are busy undermining competitiveness in the form of higher taxes and new employment red tape.”
Meanwhile the Liberal Democrats have said that the moves on their own “won’t be enough to protect the sector from the impact of Trump’s damaging taxes”.
Trade spokesperson Paul Kohler said “ministers should also be exploring better incentives for consumers to buy electric vehicles including VAT cuts for public charging and postponing the planned increase in vehicle tax on electric cars.”
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