The UK government is reportedly planning to weaken its zero emission vehicles (ZEV) mandate, which currently requires 80 per cent of all new cars sold in the UK to be electric by 2030 on the road to a 2035 ambition of 100 per cent.

Numerous outlets in the UK reported on Monday that the country’s government was planning to water down its 2030 targets, and plans to meet with the UK car industry this week to discuss a potential shift in policy.

All reports, however, suggest that the new 2030 target could fall from 80 per cent to anywhere between 50 to 70 per cent – a potentially significant hit to the country’s electrification and its efforts to reduce carbon emissions.

The UK car industry has been pleading for a review of the ZEV mandate for some time now, declaring that demand for electric vehicles (EVs) does not match political ambition, even despite significant investments, government incentives, and improvements to charging infrastructure.

“Targets alone do not cut emissions – new vehicle uptake does,” said Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT). “Consumers and businesses will only switch when conditions – and costs – are right.”

According to Hawes, in an update published late last week ahead of the latest rumours, “consumers consistently cite familiar reasons to hold off: cost, uncertainty about infrastructure, whether an EV will meet their driving needs.

“Add in a prospective additional tax in the form of a pence per mile VED charge, and such wariness is natural,” he said.

But while the UK’s carmakers and trade unions have continued to lobby the government for years to ease the mandate, proponents of the ZEV mandate warn that any weakening of the target will only serve to harm the UK’s long-term electrification and climate goals.

Transport & Environment (T&E) said the SMMT’s claims lean “heavily on selective evidence, unsupported assertions, and misleading interpretations that exaggerate challenges while ignoring clear signs of significant market progress.”

T&E pointed to data which showed that BEV sales had increased by 31 per cent year-on-year in May and 56 per cent year-on-year in April.

“Let’s be clear: the SMMT has spent years overstating the challenges of the EV transition while downplaying industry inaction to justify weakening the ZEV mandate,” said Tim Dexter, T&E UK vehicles policy manager.

“The reality is much simpler. Carmakers that moved early, like Renault, are now gaining market share in the UK and globally thanks to great new EV models. Those that delayed are not victims of policy; they are betting on political backtracking. That is not a strategy, it is a gamble that risks leaving them behind in a rapidly electrifying global market.”

The 2030 ban on petrol and diesel vehicles was introduced in 2020 by former Conservative prime minister Boris Johnson, before it was then pushed back by then Conservative prime minister Rishi Sunak in 2023.

It was under Sunak that the phased targets for EV sales under the ZEV mandate were introduced, with annual targets ramping up to 100 per cent by 2035 – though any targets after 2030 were yet to be enshrined in legislation.

Labour, which ousted the Conservatives in July 2024, pledged to bring the petrol and diesel ban back to 2030, and now appears unwilling to cement any ban at all.

“Investors in the UK have been absolutely clear that the Zero Emission Vehicle (ZEV) mandate is vital for driving investment into our charging infrastructure,” said James Alexander, CEO of the UK Sustainable Investment and Finance Association (UKSIF).

“Any attempt to water down these targets could send warning signals to these investors about the government’s long-term commitment to electrifying our transport network. This could threaten future financing for charging infrastructure, at a time when more and more consumers are seeking to switch to electric vehicles.”

The UK’s seesawing on its EV targets mirrors what has already been taking place on the European Continent, after the European Commission proposed in December dropping the European Union’s effective ban on new combustion-engine cars from 2035 by allowing continued sales of some non-electric vehicles.

The Commission had come under intense pressure from Germany, Italy, as well as the European car industry, to relax its plan to ban the sale of petrol and diesel cars and vans from 2035. Instead of a 100 per cent cut in allowed emissions, the Commission has proposed dropping that to a 90 per cent cut.

Such a move, however, could see battery electric vehicle (BEV) sales slip by as much as 50 per cent, according to T&E, who analysed the potential impact of the Commission’s proposal.

“It’s like hedging your bets when there’s only one horse in the race,” said Lucien Mathieu, cars director at T&E, speaking in February.

“The world is going electric, but the EU proposal would divert investment into other technologies that won’t deliver for the climate or the economy. The current 2035 target provides the investment certainty Europe needs to scale up EV production and compete globally.

“The proposed changes would mean keeping the combustion engine and hybrid alive and rewarding the laggards.”

See The Driven’s detailed EV sales data here: Australian electric vehicle sales by month in 2026; by model and by brand.

Please sign up for The Driven’s free daily newsletter and get the latest EV news and analysis delivered straight to your inbox. 

Joshua S. Hill is a Melbourne-based journalist who has been writing about climate change, clean technology, and electric vehicles for over 15 years. He has been reporting on electric vehicles and clean technologies for Renew Economy and The Driven since 2012. His preferred mode of transport is his feet.

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Lease a Car: Quick Tips

• Considering your annual mileage is a crucial step when leasing a car.
• Negotiate when leasing to reduce the capital cost and money factor, which will lower your monthly payment.
• Get familiar with leasing jargon because some terms aren’t used in traditional auto financing.
• Establish and stay within a budget. Remember that you are responsible for maintenance and insurance expenses for a leased car.

At first blush, car leasing seems like a grand idea. After all, you can get more car for the same monthly financing payment. But a lower payment is only one part of the decision.

Many shoppers lease because they like driving a new vehicle every two or three years, staying under warranty, or simplifying business-use deductions. Automakers may also offer lease incentives that are not available on purchases. And when the lease ends, you can usually return the vehicle without selling it or negotiating a trade-in.

This guide explains how leasing works, what you can negotiate, how leasing compares with buying, and what to know before signing.

What Is Car Leasing?

Car leasing is like renting a vehicle for a contracted period, usually 24 to 36 months. Unlike financing a purchase, where payments help you eventually own the car, leasing means you pay for the vehicle’s estimated depreciation during the lease term, plus financing charges.

Most consumer leases are closed-end leases. That means the lease sets the mileage limit, monthly payment, term, and purchase option upfront.

What Do You Need to Know Before Leasing?

The most important question is: How many miles do you drive each year?

Leasing Mileage Cap

Signing a lease means agreeing to a mileage cap, usually 10,000 to 15,000 miles per year. Exceed it, and the leasing company charges a per-mile penalty.

Penalties often range from 12 cents to 30 cents per excess mile. At 30 cents per mile, every additional 1,000 miles would cost you $300. Before signing, estimate your annual driving and confirm the mileage charge.

What Is the Money Factor in Leasing?

When you finance a car, the cost of borrowing is shown as an interest rate. In a lease, that cost is called the money factor.

Money factors are shown as decimals, such as 0.0010 or 0.0023. To estimate the equivalent interest rate, multiply the money factor by 2,400. For example, 0.0023 x 2,400 = 5.5%.

Can I Negotiate the Price of a Leased Car?

Yes. You can negotiate the vehicle’s capitalized cost, which is the lease version of the purchase price. Manufacturer incentives or advertised lease deals may limit flexibility, but it is still worth asking.

TIP: Dealers may be more willing to negotiate before a new model arrives or near the end of the model year.

How Can I Reduce a Monthly Lease Payment?

• Reduce the capitalized cost by negotiating a lower vehicle price.
• Ask for a lower money factor, especially with strong credit.
• Put more money down or negotiate a higher trade-in value.
• Compare offers from multiple dealers.

What Can You Negotiate in a Lease?

• Capitalized cost
• Down payment
• Trade-in value
• Money factor
• Disposition fee

What Usually Cannot Be Negotiated?

• Residual value, which the leasing company generally sets
• Acquisition fee, which lessors rarely waive

Who Maintains a Leased Car?

You are responsible for maintaining the vehicle according to the owner’s manual. Some new vehicles include complimentary maintenance, which can reduce lease-term costs.

At the end of the lease, the leasing company inspects the vehicle for damage beyond normal wear and tear. If the inspector finds excess wear, you will be charged.

Who Insures a Leased Car?

You are responsible for the insurance coverage for the leased vehicle. The leasing company sets minimum coverage requirements, so confirm those amounts and get an insurance quote before signing.

What If I Want Out of My Lease Early?

A car lease is a binding contract. If you end it early, expect a penalty. In some cases, you may owe a large portion of the remaining payments. You cannot simply sell the car because you do not own it.

Market conditions may give you options. A dealership might help you exit a lease early if it wants your vehicle. Lease-transfer services may also connect you with someone willing to assume the lease, though fees may apply.

Compare all costs before choosing an early-exit option.

How Does Credit Affect Car Leasing?

As with financing, leasing companies review your credit score and history. Leasing generally requires stronger credit than financing because the lessee builds no equity in the vehicle.

If your credit score is low, you may still qualify, but expect a larger down payment and a higher money factor.

RELATED: Can I Buy a Car with Poor Credit History?

Car Leasing vs. Buying

Whether you lease or finance, you will likely make monthly payments and pay upfront fees. With financing, the upfront cost is usually a down payment. With leasing, you may pay a security deposit, first month’s payment, acquisition fee, down payment, taxes, registration, or some combination.

Pros of Leasing

1. Lower monthly payment. Because you pay for estimated depreciation rather than the full purchase price, lease payments are usually lower than loan payments for the same vehicle.
2. New vehicle every few years. Leasing lets you drive a newer vehicle more often, usually while it is still under the factory warranty. You may also benefit from newer safety and technology features.
3. Easier end-of-term process. At lease end, you can usually return the car without selling it or negotiating a trade-in.
4. Possible purchase opportunity. If the car is worth more than its residual value, buying it at lease end may be a good deal.
5. Used-car leasing may be available. Some dealers lease certified pre-owned vehicles, usually newer models with warranty coverage.

RELATED: Returning a Lease Car: What To Expect

Cons of Leasing

1. No equity. Lease payments do not build ownership value. At the end, you return the vehicle unless you buy it.
2. Mileage limits. Every lease includes a mileage cap. Exceed it, and you pay a penalty. High-mileage leases cost more monthly, but can help frequent drivers avoid end-of-term charges
3. Damage charges. You are responsible for damage beyond normal wear and tear.
4. Early termination penalties. Ending a lease early can be expensive, even if you use a lease-transfer service.

Pros of Buying

1. Ownership. Once the loan is paid off, the vehicle is yours.
2. Resale or trade-in value. You can sell or trade the vehicle and use its value toward another car.
3. More flexibility. You can sell or trade a financed vehicle at any time, as long as you pay off the loan balance.

Cons of Buying

1. Higher upfront cost. Buyers often need a larger down payment, especially with weaker credit.
2. Higher monthly payment. Loan payments are usually higher than lease payments for the same vehicle.
3. Risk of being upside down. Depending on loan length, depreciation, and interest, you may owe more than the vehicle is worth for part of the loan term. After the warranty expires, repair costs are also your responsibility.

Leasing and Buying: Key Differences

You can draw some fairly strong contrasts between vehicle leasing and financing. Each offers both advantages and disadvantages. In the short term, leasing a car will cost less. However, two leases will cost more than buying one car in the long run. And at the end of the loan term, the vehicle will be paid off, and whatever value the car retains will be yours.

Here are some other differences.

Types of Leases

Closed-End Lease

A closed-end lease is the most common type. It sets the term, payment, mileage cap, and residual value upfront. If you meet the contract terms, you can return the car at lease-end. You may also have the option to buy it for a predetermined price.

Open-End Lease

An open-end lease places more risk on the lessee and is more common for businesses. If the vehicle’s market value is lower than the residual value at lease end, the lessee pays the difference. Open-end leases may offer more flexible mileage terms.

Single-Pay Lease

A single-pay lease requires all lease payments upfront. It can lower the money factor and total cost, and it may help shoppers with weaker credit qualify.

Can I Lease a Used Car?

Yes. Some dealerships lease used cars from its certified pre-owned vehicle inventory, usually newer models with factory warranty coverage and CPO benefits.

How Long Is a Car Lease?

Most leases last 24 or 36 months, though some advertised specials may run 39 months or longer. Longer terms can lower the monthly payment, but the difference may be modest.

Can a Car Lease Be Extended?

Yes. Many lessors allow month-to-month or fixed-term extensions. You will keep making payments and may need to sign an extension agreement.

Is It Possible to Lease a Car for One Year?

It is possible, but it can be expensive because vehicles depreciate quickly in the first year. A long-term rental or subscription-style car club may be a better short-term option.

Key Leasing Terms to Know

How to Lease a Car

1. Check your credit score. Strong credit can help you qualify for better lease terms.
2. Set your upfront budget. Know how much you can pay at signing, including fees and deposits.
3. Estimate your annual mileage. Choose a mileage cap that matches your driving habits.
4. Shop for vehicles with strong resale value. Higher expected residual value can lower the monthly payment.
5. Compare lease offers. Review capitalized cost, money factor, fees, mileage cap, and end-of-lease charges.

Questions to Ask Before Signing

Here are questions to ask the dealership or other lessor before you leap.

1. What is the residual value?
2. What is the lease-end purchase price?
3. What is the money factor, and what interest rate does it equal?
4. Is there a payment grace period?
5. What is the late-payment fee?
6. What fees apply at lease end?
7. What are the early-termination penalties?
8. What counts as normal wear and tear?
9. What is the charge for each excess mile?

Bottom Line on Car Leasing

Car leasing can provide lower monthly payments, a newer vehicle every few years, and warranty coverage during most or all of the term. But it also comes with mileage limits, no ownership equity, potential wear-and-tear charges, and costly early-termination penalties.

Leasing works best for drivers who want predictable short-term costs and newer vehicles. Buying is usually better for long-term ownership, flexibility, and building value in the vehicle.

Visit the Kelley Blue Book Affordability Hub to explore our curated articles designed to help you make smart, budget-friendly decisions.

Editor’s Note: We have updated this article since its initial publication.

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