The government has announced a relaxation of electric vehicle (EV) sales targets to help the car industry in the face of trade tariffs from the US.
A ban selling new petrol and diesel cars will still come into effect in 2030, but manufacturers will now have more flexibility on annual targets and face lower fines.
Transport Secretary Heidi Alexander told BBC Breakfast its changes were not a “silver bullet” but part of the solution to responding to US tariffs.
UK opposition parties said Labour’s measures would not be enough to boost the car industry.
US President Donald Trump has imposed a 25% levy on cars imported to the US, which is a major export market for the UK motor industry.
It came into force last week and is separate to a 10% tax on nearly all UK products announced by Trump on Wednesday.
A consultation on the government’s EV target changes ended in mid-February, but Alexander told the BBC that the government had sped up the process of introducing them in response to the tariffs.
The government said it had worked with UK car manufacturers to simultaneously “strengthen its commitment to the phase out” while introducing “practical reforms to support industry meet this ambition”.
Currently, 28% of new cars sold in the UK this year must be electric, a target that will rise each year until 2030.
But manufacturers will now be given more freedom in how they meet their yearly targets – meaning if they don’t sell enough EVs in one year, they can make up for it by selling more the next year, for example.
In addition, the fine of £15,000 per vehicle sold that does not meet the latest emissions standards will be cut to £12,000.
Meanwhile, a ban on the sale of hybrid vehicles – which combines a petrol or diesel-powered engine with an electric motor – has been confirmed as from 2035.
Smaller British firms like Aston Martin and McLaren will be allowed to keep selling petrol cars beyond the 2030 deadline
As part of the changes, the car industry will also be given £2.3bn in tax breaks.
The ban on sales of new petrol and diesel cars was extended to 2035 under the previous Conservative government, but Labour promised to restore the 2030 deadline in its manifesto for the 2024 election.
Car industry leaders have previously warned that drivers were not switching to electric vehicles at the rate needed to meet the deadline due to the cost of buying the cars privately and a lack of charging point infrastructure.
Sir Keir said the measures would “boost growth that puts money in working people’s pockets” and ensure “home-grown firms” can export UK-made cars worldwide.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said the changes are “very much needed”.
However, Robert Forrester, chief executive of car dealership chain Vertu Motors, told the BBC said there were “lots and lots of words in the announcement but it doesn’t really address the major issues”.
He said manufacturers will still be paying billions in fines, despite the cut to £12,000 per car.
“Nothing has really changed here – this is just tinkering,” he said, adding: “The government has gone for hope over reality.”
Shadow business secretary Andrew Griffith described the measures as “half baked” and repeated Conservative leader Kemi Badenoch’s claim that “net zero by 2050 is impossible”.
Liberal Democrat transport spokesperson called for “better incentives” for consumers to buy electric vehicles, and said the changes “won’t be enough to protect the sector from the impact of Trump’s damaging tariffs”.
The US is the second largest export market for the UK’s car industry, after the European Union.
Coventry-based car manufacturer Jaguar Land Rover announced on Saturday that it will “pause” all shipments in April to the US as it works to “address the new trading terms”.
A separate 10% tariff on UK imports came into effect on Saturday, with higher rates in place for some other major economies.
