A significant first step for UK Automotive
The gravity of recent weeks for the UK automotive industry was signified on Monday with the prime minister and chancellor moving quickly to announce – at the production line of one of Britain’s globally renowned car makers – the outcome of government’s Zero Emission Vehicle Mandate and 2030 end of sale consultation. It is a significant and essential first step that industry welcomes, with government having considered the intense pressures manufacturers are under in such a vastly changed global and geopolitical landscape.
Such pressures, however, are long in the making and not just the product of recent weeks. Indeed, the mandate was designed in more optimistic times when the cost of making, and therefore buying, an EV was expected to fall significantly; energy and charging costs anticipated to decrease substantially; and global trade assumed to remain smooth and open between major markets.
Despite the challenges and at immense cost, industry has continued to deliver ever greater EV choice and at pace, with massive discounts driving uptake to record levels. Consumer demand still, however, remains weaker than the country’s ambitions. Automotive remains fully committed to decarbonising but delivering on ambition urgently requires additional measures to encourage consumers, and particularly EV sceptics, to switch. As SMMT has set out, purchase incentives could boost EV demand by a further 15% on top of current outlooks, getting a total of two million new EVs on UK roads by 2028, bringing significant carbon savings with them.
Given the severe new headwinds facing the industry following the introduction of punitive US tariffs on parts and vehicles shipped across the Atlantic, further action will almost certainly be needed. Trade negotiations are continuing at pace but government can also prioritise the publication, and implementation, of its long-awaited industrial and trade strategies. In a fast changing business landscape, a package of measures is necessary to support automotive, especially the supply chain and SMEs, which contribute substantially to economic growth, employment and investment.
Many of the challenges the UK automotive sector faces are reflected globally. This week’s meeting of the International Organisation of Motor Vehicle Manufacturers (OICA), taking place in Washington, D.C. has been, therefore, a good opportunity to find common ground and solutions. We took the opportunity to meet with US trade policy stakeholders from industry and government to discuss the current situation and, as we have maintained, cool and calm heads need to prevail.
UK government is seeking a deal with the US administration so we are hopeful that shared ambitions and mutual interest will triumph. Automotive is acutely impacted by the tariffs levied, which remain at the forefront of UK minds. SMMT will continue to support the negotiations, and we hope meetings held this week improve understanding.