Internal Combustion Engine Vehicle Sales Phase-Outs: United Kingdom

Overview

One straightforward way to accelerate a transportation fleet’s shift away from fossil fuels is to simply ban the sale of internal-combustion engine (ICE) vehicles.  As of the start of 2021, 14 countries had announced plans to phase out sales of ICE vehicles. Another 31 regional and municipal governments around the world announced similar plans.

The U.K. government has been notable in upping the ambition of its phase-out plan. In February 2020, the government said it would bring forward the ban on new sales of diesel and petrol engines to 2035 from 2040 and include plug-in hybrid electric vehicles. In November 2020, the government pulled the ban date forward again — to 2030 for ICEs (the 2035 date stayed in place for hybrids). The ban includes passenger cars and vans.

Source: BloombergNEF, government announcements.

Impact

By setting long-term plans on how to phase out internal combustion engines both in new sales and in the existing vehicle fleet, governments can send clear signals to automakers and vehicle fleet operators to accelerate progress towards decarbonization.

ICE phase-outs are likely to be critical if the transport sector is to play its part in meeting net-zero targets. Under BloombergNEF’s Economic Transition Scenario, which models the energy world to 2050 under essentially business-as-usual assumptions, the U.K. does not reach 100% electric vehicle adoption in new vehicle sales by 2030. Further policy incentives and regulations – such as the ICE ban – will be needed.

Source: BloombergNEF

Opportunity

As battery electric vehicles (BEVs) become increasingly cost competitive with ICEs in passenger and light commercial vehicle segments, BNEF expects economics to drive adoption in the mid-2020s. Uptake could be spurred with additional policy measures already under discussion, such as incentives to build out public charging infrastructure.

Source

BloombergNEF. Extracted from EVO pg 119-120; U.K. ETO pg 21 Learn more about BloombergNEF solutions   or   find out how to become a BloombergNEF client.