Van fleets face the sharpest compliance gap as most manufacturers rely on CO2 credits rather than genuine ZEV performance to avoid penalties
New research from JATO Dynamics, a global leader in automotive intelligence, shows that while manufacturers are accelerating their electrified passenger car ranges, the light commercial vehicle segment remains the UK automotive industry’s biggest ZEV Mandate blind spot, leaving fleet and leasing customers exposed to a widening gap between regulatory ambition and vehicle availability.
The report, ‘Navigating the ZEV Transition: The Impact on OEM Pricing and Leasing Strategies’, analyses the 2025 full year performance of 13 major manufacturer groups against the UK ZEV Mandate, which requires 33% of passenger car sales and 24% of van sales to be zero emission this year, rising to 38% and 34% respectively in 2027.
Across the groups reporting LCV data, van electrification consistently trails passenger cars, often by a significant margin. Ford’s Transit remains the brand’s only battery electric van and accounts for just 6.9% of its LCV mix, more than nine percentage points short of target. Renault’s LCV performance sits nearly 10 points below target due to a lack of new electric models, while Mercedes Benz LCVs remain 92% reliant on combustion engines, leaving the brand facing real financial exposure as thresholds rise.
Stellantis, despite increasing incentives across its van range, saw LCV business volumes fall regardless, with combustion down 24% and battery electric down 13% year on year, a sign that incentive spend alone is not shifting fleet buying behaviour.
The UK Mandate allows manufacturers to offset ZEV underperformance against CO2 overachievement, and JATO’s analysis shows this mechanism is doing significant work. Volkswagen Group avoided an estimated £225 million in passenger car penalties entirely through CO2 credit transfer, despite missing its ZEV target by nearly 19,000 units. Stellantis, Hyundai, BMW, Ford and Renault also closed the year with no net penalty once credits were applied.
Not every manufacturer was fully covered. Toyota Group’s heavy reliance on hybrid technology, with just 6.6% ZEV share against a target more than four times higher, left an estimated £113 million in penalties even after credit transfer. Nissan faced a similar outcome at £119.6 million, driven by the absence of new electric models until very late in the year.
The report’s business channel analysis, based on more than five million individual leasing quotations in Q4 2025 alone, shows manufacturers increasing incentive support for electrified powertrains across the board. However, the relationship between incentive spend and fleet uptake is inconsistent. Toyota’s BEV business volumes fell 34% year on year despite higher discounts, which JATO attributes to a limited product offer rather than a lack of commercial support. Nissan’s BEV business volumes were down 68% for the same reason.
By contrast, Ford’s business BEV volumes have grown roughly fourfold in the past two quarters following the launch of the Puma and Capri, and Renault’s business BEV volumes have nearly doubled on the back of the new Renault 5, suggesting that product launches, not incentives, remain the primary lever for shifting fleet demand.
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.”