The Society of Motor Manufacturers and Traders (SMMT) has called for more support from the British government as the UK auto industry faces major challenges ahead. It also warned of the danger of “precipitous decline” if the UK’s automotive sector is left stranded.
It argues that the UK’s auto industry has the potential to gain 40,000 jobs this decade but, if left stranded, risks precipitous decline.
Keeping the British automotive industry competitive
Commissioned by the SMMT and written by Public First, the report strategy sets out a series of policy proposals for the rest of 2021 and the remainder of the decade, covering all aspects essential to automotive industry competitiveness.
The automotive sector is uniquely placed to help this government deliver on its agenda; to level up, deliver net zero and trade globally. Mike Hawes, SMMT
The strategy calls for a new Build Back Better Fund to support industry transformation, not just in automotive but across other manufacturing sectors, to “revolutionise production lines and overcome some of the areas where the UK lags in cost competitiveness or strategic support – from skills to energy costs”. Most importantly, the SMMT says the fund will help the sector transition to net zero and transform existing manufacturing and supply chains.
The shift to electric vehicles (EVs) is the biggest challenge facing the sector, the SMMT says. The government is already working with industry to attract additional battery manufacturing to the UK, but the report calls for a binding target of 60GWh of battery capacity be built by 2030. These gigafactories would give British manufacturers the capability to produce up to one million EVs a year and ensure tariff-free access to critical markets in the EU.
Finally, to support market transition, the report calls for the installation of at least 2.3 million charging points nationwide before the end of the decade. This would ensure all drivers – especially those without driveways – have the confidence to invest in the latest zero-emission technologies, investment that will not just support a healthy domestic vehicle market but which will underpin mass-market automotive manufacturing in the UK and help deliver the country’s climate change and air quality goals.
Boosting the UK’s auto heartlands
The stakes are high. In a best-case scenario, with the sector transitioning successfully to a zero-emissions future with ambitious global trading terms, there is the potential to gain 40,000 new, well paid and highly skilled sector jobs by 2030. This would provide a significant impact in auto heartlands such as the North East and the West Midlands, directly helping to ‘level up’ the UK – the report maintains.
Without these competitive conditions, however, the UK’s automotive industry risks decline, according to the SMMT. In a worst-case situation, with the sector left stranded, analysis shows that about 90,000 jobs could be lost compared with the central scenario, with most of these outside London and the South East, increasing UK regional inequality, the report suggests.
Speaking at the automotive industry’s annual summit, Mike Hawes, SMMT chief executive, said: “The next few years represent a critical period for the sector. The pace of technological change is accelerating and the competition more ferocious. If we are to secure vehicle manufacturing in this country, with all the benefits to society that it brings, decisions need to be made today.
“The automotive sector is uniquely placed to help this government deliver on its agenda; to level up, deliver net zero and trade globally. The government has made clear its support for the sector in its negotiations with Europe, so now is the time to go full throttle and take bold action to support one of Britain’s most important industries.”
Hawes also told a press conference that high energy costs are a major challenge in UK manufacturing and action from government was needed to address that competitive constraint for automotive and other industries in the UK. He stressed the need for the right infrastructure and conditions required for a thriving automotive manufacturing industry able to successfully meet the major challenges ahead.
‘Full Throttle: Driving UK Automotive Competitiveness’ outlines 12 policy proposals:
Technology and innovation
Commit to creating 60GWh of battery production within the UK via gigafactories by 2030.
Support development of a fuel cell gigafactory with 2GWh capacity to support cars, heavier vehicles and rail units by 2030.
Roll out a comprehensive and long-term skills strategy that supports auto needs combined with piloting greater flexibility in the apprenticeship levy to support retraining.
Commit to the UK becoming a global leader in developing, testing, trialling and deploying connected and automated vehicle technology.
Introduce a new Build Back Better Fund to support good manufacturing jobs for the future and help lower manufacturing costs such as energy.
Allow net-zero critical industries, such as manufacturers of low carbon, hydrogen and battery vehicles, to access the same benefits and compensation schemes as energy-intensive industries and get more support within the UK Emission Trading Scheme.
Fund trial and demonstration projects to explore the use of hydrogen during manufacturing.
Ensure the UK tax system helps position the UK as an attractive destination for global investment.
Consumer, market and trade
Develop a holistic infrastructure strategy to ensure that at least 2.3 million public charging points are in place by 2030.
Commission an independent review to holistically consider the long-term future of fuel duty and carbon-based taxes such as vehicle excise duty in a decarbonised sector.
Continue plug-in vehicle incentives beyond their current term and exempt ultra-low emission vehicles from taxation for the next five years.
Work with the industry to develop an ambitious, forward-looking trade strategy, which targets the sector’s most important markets.