NAA Member News: Brabners – Managing the automotive industry’s EV transition
Christine Hart, legal director in Brabners’ employment and pensions team, outlines the key legal and workforce considerations for automotive manufacturers navigating uncertainty around the UK’s electric vehicle transition.
The UK’s electric vehicle transition hasn’t followed a straightforward path since sales quotas were first introduced in 2024. While the long-term direction of travel towards zero-emission vehicles remains clear, the pace of change is becoming less predictable.
The government’s ZEV mandate review has deepened uncertainty for manufacturers already struggling to keep pace. Ministers have confirmed a further review is under discussion, with changes unlikely before early 2027.
The current reality is that manufacturers need to plan for today’s rules, while also preparing a sales and workforce framework that may need to shift quickly in response to market conditions and political priorities.
Maintaining compliance
The most immediate issue for manufacturers is that the current ZEV mandate still applies. While there may be pressure to soften EV sales quotas, businesses are still required to meet rising annual targets unless and until the rules change.
This matters because the consequences of falling short can be significant. Manufacturers that don’t meet the required proportion of ZEV sales may face financial penalties or need to rely on available flexibilities in the rules. Even where future reform is possible, slowing transition plans too early could create unnecessary risk.
For businesses, the challenge is managing compliance while retaining flexibility. Manufacturers should keep sales performance and production planning under close review, particularly where current EV demand remains below the level needed to comfortably meet future targets.
Cost pressures and workforce planning
The financial burden of the EV transition remains a major concern for manufacturers. Battery costs, energy prices, charging infrastructure and the need to retool production lines all continue to affect profitability.
At the same time, consumer demand hasn’t developed evenly across the market. Some manufacturers have relied on discounts and incentives to support EV sales, adding further pressure to margins. For businesses already managing high input costs and global competition, the cost of compliance can quickly become a broader competitiveness issue.
There’s also a significant people challenge. The transition to EVs requires different skills, from battery technology and software integration to high-voltage systems and new maintenance requirements. Businesses may need to reskill existing employees, recruit into new roles or reshape teams where production needs to change.
If jobs or shift patterns are at risk, employers should act early, particularly in anticipation of the enhanced unfair dismissal protections due to be introduced under the Employment Rights Act. They need to communicate clearly, review contracts, and plan what support staff will need.
Supply chain resilience
Uncertainty around quotas and transition timing can also affect supply chain arrangements.
Automotive manufacturers depend on complex, international supply chains. Changes in EV production volumes can affect component supply, particularly given the raw materials, software, logistics and tooling involved in battery production. Where contracts were agreed based on particular production assumptions, businesses should consider whether those points still hold.
It matters most where agreements carry volume commitments, fixed pricing, long-term supply obligations or investment milestones. If policy changes or demand shifts, parties may find themselves locked into arrangements that no longer reflect commercial reality.
Manufacturers should check whether agreements allow for changes in volume, price, timing or performance expectations. They should also assess whether key suppliers are financially and operationally resilient, particularly where those suppliers are investing in EV capability or managing reduced demand for legacy components.
Product strategy
Recent developments underline the fact that manufacturers are reassessing the pace of their EV strategies. Rolls-Royce, for example, has moved away from its previous target of selling only electric cars by the end of the decade, citing a different market environment and continuing customer demand for internal combustion engine (ICE) models.
This reflects a wider issue for the sector. Regulation, consumer confidence, infrastructure and affordability are now jointly driving product strategy. For some businesses, the right approach may be to maintain flexibility across EV, hybrid and ICE production where legally permitted.
But policy instability should not be mistaken for a reversal of the transition. The UK’s long-term direction remains towards electrification, and manufacturers still need to be ready for a market in which zero-emission vehicles play an increasingly central role.
Gearing up for the future
The key issue now is not whether electrification will continue, but how manufacturers should navigate a transition shaped by both regulatory pressure and political uncertainty.
Businesses should avoid treating the current review as a reason to pause. Instead, it should be seen as a prompt to reassess compliance strategies, contracts and workforce requirements. The companies best placed to manage the next phase will be those that remain ready for electrification while building enough flexibility to respond if the regulatory framework changes.
The EV transition may be becoming less linear, but it has not gone away. Businesses that combine legal readiness, commercial flexibility and workforce planning will be best placed to stay compliant and competitive.
