UK car makers and dealers are calling on the Government to revise and invest in their zero emissions target and electric vehicle registrations.
In its annual analysis of the automotive sector, the Society of Motor Manufacturers and traders report points to some areas that need fixing:
- Sky high energy costs
- Business costs that make it harder to employ
- New levies on the EVs we are mandated to sell
The Industrial Strategy must align government policies to deliver growth. To attract investment.
The ZEV mandate, however, does the exact opposite, say the SMMT.
CEO Mike Hawes told industrialists and journalists this week, “Let me be clear. This industry is committed to decarbonisation. EVs are the future. The issue is how we get there.
“We, as an industry, were spending billions creating zero emission vehicles before any targets were set. We committed billions more to make them.
:But we are now spending billions more subsidising a market shift that isn’t shifting because natural demand is just not sufficient.”
EV market share is 23.9% so far this year. Independent reports suggest natural demand is less than half that. Next year the target will be 38%. In 2028 52%.
Vans are only at 9.5% when we have to hit 34% in ’27 and 46% in ‘28.
No one in the industry thinks it can be done, he added.
In a cynical aside, Mr Hawes said, “The Climate Change Committee, however, knows better than the industry. Its Seventh Carbon Budget assumes the car and van market will be 95% BEV by 2030.
“But the Committee on Climate Change’s remit does not extend to industrial consequences. To the impact on local production, on jobs and communities. If we all have to buy EVs from abroad to hit net zero so be it. The UK will meet its Climate goals but the domestic industry will be collateral damage.
“Governments, however, have to care about such consequences.
“The ZEV mandate is already costing jobs, profitability and is creating significant risk to UK investment. It needs to be reviewed. Urgently.”
He said the target should be amended so it didn’t have to spend £5billion a year incentivising sales – money that ought to be invested in new products and jobs and amended so we can have the healthy market with the EV volumes chargepoint companies crave which will attract investment and support a supply chain in peril.
“Changing the mandate is not about changing direction. It is about getting to your destination realistically and putting the UK back on the agenda of global investors now.
“There is no time to lose, but if we are to produce more electric vehicles here, the Industrial Strategy must also address the cost of the energy we need to produce them.
“The British Industrial Competitiveness Scheme aims to cut industrial electricity costs by twenty-five per cent. It is a critical first step – one we called for. But a twenty-five per cent cut still leaves our costs sixty per cent above the EU average.
“We need more fundamental reform of energy markets to compete and we need it urgently. So Industrial Strategy, Climate Strategy, Energy Strategy all aligned for growth.
Turning to trading and costs Mr Hawes said it was important to get the rules right and increase our £110 billion pounds worth of trade and grow UK exports.
“Last year we were focused on the US. Getting that deal to safeguard our small volume, high value manufacturers. This year there’s a trade threat closer to home.
“The post-Brexit TCA sought to safeguard the automotive industry. Largely it succeeded despite the costs, complexities and challenges that ensued. But it also contained rules of origin criteria that get tougher. The EU using trade policy to support its own industrial policy.”
Electrification and localised battery manufacturing, however, has not gone as quickly as anticipated. Those tougher rules of origin now threaten a ten per cent tariff on seventy per cent of UK-EU trade. The tariff cost? £1.4billion. £1.4 billion that should be used to reduce costs not increase prices.
“Negotiations with the EU must go deeper”, said Mr Hawes. ” The Commission’s ‘Made in Europe’ proposals as drafted effectively shut out UK-assembled vehicles from most of the European market. And that risks becoming one of the most spectacular own goals in history.
“Because if Britain is written out of ‘Made in Europe’ this is not just a problem for UK producers, it is a direct threat to the European industry.
“This is because we are part of an integrated European industry. We are the EU’s biggest car and parts market as they are ours. Since 2019, the combined value of EV and P-HEV trade with the EU alone has grown from around £2.3 billion to £16.4 billion. So damage us and the EU damages itself.”
He concluded, “We must align Industrial, Net Zero, Energy, Trade and fiscal strategies in the pursuit of growth. We need to be ahead of the game not chasing it.”
