NAA Member News: Brabners – Approaching the Zero Emission Vehicle Mandate
With April bringing renewed clarity on the Zero Emission Vehicle (ZEV) Mandate, Christine Hart, Legal Director at purpose-led independent law firm Brabners, discusses how businesses across the north’s automotive industry can prepare for the changes that the legislation will bring.
In early April, Prime Minister Keir Starmer officially followed through on his manifesto pledge to reinstate the ban on the sale of new internal combustion engine (ICE) vehicles from 2030.
This move was widely expected – and given that the deadline is fast approaching, many in the sector were already working towards this timeline. That being said, manufacturers, dealers and suppliers alike will have welcomed the accompanying relaxation of the ZEV Mandate, which shifts the deadline on the sale of hybrid vehicles back to 2035 – a move that will provide a smoother transition for manufacturers and consumers while still working towards the long-term goal of zero-emission vehicles.
Despite this, the onus remains on manufacturers to boost EV production, despite consumer demand remaining weak. In the absence of further incentives for customers to make the transition away from ICE vehicles, it’s important that businesses remain flexible in both managing their workforce and their assets to ensure they’re best placed to navigate the coming years.
Changes in the workforce
Speaking to businesses across our network, a key priority over the past 18 months has been to plan how they can develop a workforce capable of delivering this transition. For example, HR teams may need to implement re-skilling programmes and focus on bolstering recruitment – particularly in digital fields related to EV.
Some businesses may also be required to make geographical changes to their workforce as they seek to capitalise on regional strengths. The North East of England is already responsible for 20% of Europe’s EV production, while the Humber, Teesside and Merseyside are all lined up to receive a significant share of a pledged £1billion in government investment to create 50,000 new sustainable automotive jobs, making them hotspots for potential growth.
As such, this transition may require a degree of restructuring within organisations to facilitate shifting resource, whether this be temporarily reducing numbers or moving skill within the business. From an HR perspective, it is essential that any changes are managed in accordance with the applicable employment law rules and regulations and are delivered effectively and sensitively, taking into consideration how shifting department structures can alter the shape of the company and its hierarchy.
Amid continued calls for the government to further incentivise consumer EV adoption – thus bridging the gap between low consumer demand and high production volumes – it’s key that employers maintain an agile workforce that is multiskilled across ICE vehicles, hybrids and pure EVs – and is ready to deal with the shifting tides of demand.
In practice, this may involve consulting with employees about structure and role changes, drawing up new employment contracts, reassessing salary and benefit structures and considering how best to deploy training programmes. Engaging with an experienced legal advisor can be an effective way to identify where any pressure points may arise and address them before they become an issue, ensuring that the company structure can evolve in a way that best suits its workforce.
Machinery and assets
The management of assets will also be a major consideration – for manufacturers in particular – as equipment tailored to ICE vehicle and management starts to become obsolete.
In its place, there will be increasing demand for EV-friendly assembly lines and parts, such as equipment for assembling and charging batteries, and lifts and conveyors that can handle heavier EV components. And, importantly, as EVs rely on computer systems to run, manufacturers will also begin needing to make updates to their production processes to integrate software development and testing.
Because the initial investment required to carry out this transition could be costly, businesses should make plans to mitigate the impact of potential dual overheads they may face during the transition period, as they have to maintain both old and new equipment simultaneously. At the same time, older ICE equipment may need to be written off or potentially sold at a loss.
Management teams should also be aware of various support measures available to help mitigate these costs. The government’s full expensing scheme, for instance, lets businesses deduct 100% of the cost of qualifying machinery or plant from their profits before tax during the year it was bought.
Contractual adjustments
When looking to invest in new equipment, the support of a legal advisor can also be particularly useful in helping manufacturers to revise their contracts with suppliers and distributors to address the extended mandate.
This might involve negotiating terms related to delivery schedules, pricing and compliance obligations.
Of course, it is not just vehicle manufacturers that will need to adjust their strategies and take measures to prepare. Facilitated with the support of a legal adviser, OEMs can also be proactive when it comes to potential commercial risks through measures such as Retention of Title clauses. These clauses enable suppliers to retain legal title to goods until payment is received in full, offering a measure of protection in the event of the buyer’s insolvency. In a sector with rapidly evolving technology, retaining title until payment is complete can offer a vital safeguard.
Five-Year Plan
Ultimately, the Zero Emission Vehicle Mandate should not be seen solely as a compliance issue. It is a catalyst for modernisation and innovation, with northern automotive businesses being offered valuable time and support to make the necessary changes.
By responding proactively, staying aligned with legislative developments, updating internal processes, engaging with the available legal and financial mechanisms and positioning themselves in future-facing markets, northern automotive businesses can not only meet the demands of this legislation but help shape the next generation of automotive innovation in the UK.
For more information on how we can support your business through this transition, contact Christine.Hart@Brabners.com.
