Customers need more incentives to buy EVs and manufacturers need more support to build them, said former president Terry Spall this morning (28 September), as the institution launched UK Automotive Sector: Surviving the Net Zero Transition at its headquarters in Birdcage Walk, Westminster.
Balancing the institution’s commitment to net zero with the desire for a profitable automotive sector, the new report highlights the industry’s importance to the UK – and the threat presented by international competition in the race to come out on top in the transition to EVs.
Nearly a million people work in the automotive industry, which had an annual turnover of about £80bn until 2019. But challenges in recent years – such as the Covid pandemic, Brexit-related issues, rising energy costs and a global semiconductor shortage – have hit the sector hard, and the number of cars built per year has dropped by 53.6% compared to five years ago.
‘Charge anxiety’
The report, which has been worked on since earlier this year, comes just a week after prime minister Rishi Sunak announced plans to delay the ban on sales of new petrol and diesel cars from 2030 to 2035.
The delay could affect plans and investments at manufacturers who were preparing for 2030, said Spall. “For others who are less prepared, the pushback is certainly welcome.”
The transition to EVs is happening regardless – but low public enthusiasm is holding it back, the report says, with roughly 80% of battery electric vehicle (BEV) sales going to private company fleets.
Range anxiety is a persistent issue for drivers, although Spall said that issue is becoming less of a concern as average ranges increase. Cost is a significant hurdle, however, with the withdrawal of the Plug-In Car Grant and international competition for critical minerals driving prices up by 40-50% compared to fossil fuel equivalents.
“China has a complete stranglehold on the production or the extraction and processing of these materials, and to some extent can control the market,” said Spall.
“I don't say that in a detrimental way, because China have planned very carefully over the last 15 years. I’ve actually gone to China an awful lot and actually saw it first-hand. They executed a masterplan in strategy to get them to the position they’re in today. It’s not an accident, it’s happened by very careful planning.”
To ensure the UK industry can compete and survive, the government should strengthen its support, the authors said. The zero-emission vehicle (ZEV) mandate (which was confirmed today) requires manufacturers to sell a rising percentage of EVs each year from 2024, but the report says this will only drive a successful transition if other measures are put in place to make EVs more attractive to consumers.
One of the recommendations is government-mandated targets to boost the number of EV charging points.
“We've largely overcome range anxiety, but we now have ‘charge anxiety’, where people are worried ‘Will I find a charging point? If I find a charging point will it work?’,” said Paul Jones, past chair of the IMechE Automobile Division and chair of the Technical Strategy Board.
“We're all in agreement, we need at least 300,000 public charging points by 2030. Some people say significantly higher, 4- or 500,000.
“Well, we are behind on that rollout. We need to be installing something like 3,000 charging points a month, every month between now and 2030. The best we've done this year is about 1,200 a month so far.”
Cost of failure
Other issues in the UK include a lack of gigafactory capacity, high energy costs, a skills shortage, and international protectionist policies such as those in the US.
Funding to incentivise commercial manufacturing, strategic investment, and a joined-up strategy from government and industry should help tackle the issues, according to the authors.
China, which has provided subsidies and tax breaks for manufacturers, could give a good example of the type of approach needed. “They’ve done an absolutely brilliant job to get to where they are now,” said Spall. “We do enjoy general good relations with China, so I think it’s more about collaboration, more of us working together. If Chinese manufacturers want to establish manufacturing in the UK I’m sure we would welcome them in that… I think there’s a relationship there that could be very collaborative.”
If UK government and industry fail to act, the report warns, most of the cars currently made here could be replaced by imports. This would not only lead to hundreds of billions of pounds heading abroad, but could also cause higher overall carbon emissions.
Read the full report, including the list of recommendations, here.
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