Key to EV success lies in delivering competitive conditions
It was good news for UK car production this week, posting almost 40% growth in September to mark the best performance for the month since 2020, and the strongest uplift so far in 2023. While commercial vehicle output saw a small dip against a particularly strong September last year, it remained positive with volumes nearly double pre-Covid levels.
After the supply chain challenges that have tested the mettle of the sector in recent years, recovery is now firmly underway – and it’s green recovery at that. Our latest figures demonstrate that electrified cars have accounted for more than a third of all this year’s exports – up by more than a quarter. Electric CV production is also set to ramp up following last month’s start of production at the now EV-only Ellesmere Port plant.
With Britain’s growing foundational EV supply chain, world-class R&D expertise and a skilled and productive workforce, we are well positioned to become a global ZEV manufacturing hub – if the right investment and trading conditions are in place. Indeed, the sector is poised to deliver a £106bn prize between now and the end of the next parliament – contingent, of course, on a competitive business environment.
A challenge to this ambition looms large on the horizon, however, with tougher Rules of Origin coming into force from January 2024, rules that risk undermining electrified car and CV production both here and in the EU. The prospect of punitive 10% tariffs on EVs traded across the Channel is a clear and present danger, which requires an urgent resolution. Otherwise, both the UK and EU industries will face severe competitiveness challenges, and consumers on both sides of the Channel increased costs.
The obvious – and urgent – solution is to delay these requirements to 2027, allowing the necessary breathing space for automotive sectors on both sides of the Channel to scale up gigafactories and supply chains. This is readily achievable through the existing TCA framework with no need for formal renegotiation. We know the UK government supports this, and our EU industry counterparts are in equal agreement, stressing the need for such a delay in a letter to the European Commission President Ursula von der Leyen this week.
Further afield, SMMT has been supporting the UK pavilion and 10 UK companies in promoting UK Automotive at the Daegu International Future Auto Expo (DIFA). The Korean market remains hugely attractive to British auto manufacturers, so the recent extension of low and zero tariff trade between the UK and Korea was good news indeed. Missions such as this offer excellent opportunities for British companies with innovative offerings to explore what is one of the most sophisticated global markets.
