The UK’s transition to zero-emission vehicles (ZEVs) is being held back by a shortage of electric vans, according to new research from automotive intelligence specialist JATO Dynamics, which warns that the light commercial vehicle (LCV) market remains the biggest weakness in meeting the Government’s ZEV Mandate.
The report, Navigating the ZEV Transition: The Impact on OEM Pricing and Leasing Strategies, examines the 2025 performance of 13 major vehicle manufacturer groups against the UK’s ZEV Mandate. While many manufacturers are expanding their electric passenger car line-ups, progress in the van sector is lagging significantly, leaving fleet operators and leasing companies with fewer zero-emission options.
Under the current regulations, 33% of passenger car sales and 24% of van sales must be zero-emission in 2025, with those targets increasing to 38% and 34% respectively by 2027.
Electric van availability remains a major challenge
JATO’s analysis found that across manufacturers reporting LCV data, electric van sales consistently trail passenger cars, largely because of limited model availability.
Ford’s battery electric van range is currently centred on the E-Transit, which accounts for just 6.9% of its LCV sales, more than nine percentage points below this year’s mandate target.
Renault also falls almost 10 percentage points short, reflecting the limited availability of new electric van models, while Mercedes-Benz remains heavily reliant on diesel and petrol-powered vans, with combustion engine models accounting for 92% of its LCV sales.
The report also highlights Stellantis’ experience, where increased incentives across its electric van range failed to stimulate demand. During 2025, combustion van business volumes fell by 24% year-on-year, while battery electric van volumes also declined by 13%, suggesting that discounts alone are insufficient to drive fleet adoption when product choice remains limited.
Compliance credits reduce financial penalties
Although several manufacturers missed their ZEV sales targets, many avoided substantial financial penalties by using the UK Mandate’s flexibility mechanism, which allows excess CO₂ compliance to offset ZEV shortfalls.
According to JATO, Volkswagen Group avoided an estimated £225 million in passenger car penalties through CO₂ credit transfers despite missing its ZEV target by almost 19,000 vehicles. Stellantis, Hyundai, BMW, Ford and Renault also eliminated potential penalties using the same mechanism.
However, not every manufacturer was able to offset its shortfall.
Toyota Group, which continues to rely heavily on hybrid vehicles, achieved a ZEV share of just 6.6%, leaving an estimated £113 million in penalties even after applying available credits. Nissan faced a similar situation, with estimated penalties of almost £120 million after introducing new electric models only towards the end of the year.
New electric models drive fleet demand
JATO also analysed more than five million individual leasing quotations during the final quarter of 2025 to assess how manufacturer incentives are influencing fleet purchasing decisions.
The research found that while most manufacturers have increased discounts on electric vehicles, incentives alone are not enough to stimulate demand where model choice is limited.
Toyota’s battery electric business volumes fell by 34% year-on-year despite offering higher incentives, while Nissan’s business EV volumes declined by 68% for similar reasons.
In contrast, manufacturers launching new electric models saw much stronger results. Ford’s business battery electric vehicle volumes increased around fourfold following the introduction of the Puma and Capri, while Renault almost doubled its business EV sales after launching the new Renault 5.
The findings suggest that expanding product availability is proving far more effective than increasing discounts in encouraging fleets to switch to electric vehicles.
Helen Fisk, Global Head of Leasing and Professional Services at JATO Dynamics, said: “Fleet and leasing decision makers are having to plan around two moving targets at once, the pace of OEM product launches and the possibility of the mandate itself being recalibrated. What’s clear from the data is that credit trading between ZEV and CO₂ compliance is currently absorbing a huge amount of financial risk for manufacturers. That won’t be sustainable once thresholds climb to 38% for passenger cars next year, and 34% for the van segment, especially as product availability is still the limiting factor rather than customer appetite.”
As ZEV Mandate targets continue to rise, JATO concludes that manufacturers will need to accelerate electric van development if they are to remain compliant. For fleet operators, the research underlines that improving vehicle availability, rather than increasing financial incentives, is likely to be the key factor in achieving a successful transition to zero-emission transport.
