The automotive industry is facing challenging times in the UK, with Stellantis planning to close a factory in Luton and Ford UK announcing the cutting of 800 jobs.
Observers and industry players attribute the difficulties to several factors—such as Brexit in 2019, the Covid-19 pandemic in 2020, industry-specific challenges, or even company policies - the Shadow Secretary of State for Business, Andrew Griffith, specifically referred to EV policy as a "jobs killer."
While opinions on EVs can be polarised, Ford UK has been clear about what they believe is the problem. According to Lisa Brankin, Chair and Managing Director of Ford UK, for EV targets to be successful, demand needs to be boosted. Otherwise, manufacturers will end up building cars with no customers to sell them to.
Although sales of electric cars are increasing, EV manufacturers have concluded that demand has been lower than expected when the 2030 targets were set. They argue that if these cars don’t sell, producing them will become economically unviable for businesses.
Until now, they've had to heavily discount their products, or buy credits to compensate for not reaching their targets - usually from EV-specialised US or Chinese competitors importing cars into the country. Without the appropriate support and demand, the EV sector in the UK is having trouble keeping up with the pressure.
The tug-o-war between climate targets and short-term gains
By law, '80% of new cars and 70% of new vans sold in Great Britain will be zero-emission by 2030, increasing to 100% by 2035'. Labour has reaffirmed that a complete phase-out of ICE vehicles could happen sooner.
To reach these targets, government policies include the rollout of EV charging points (300,000 by 2030, or five times the number of fuel pumps in the UK), as well as a £200 million budget to roll out up to 370 zero-emission heavy goods vehicles (HGVs) and deliver around 57 refuelling and electric charging sites, with a total government investment of £2 billion in ZEVs.
However, the government is feeling the pressure from the automotive industry, which is itself struggling with difficult production conditions. While maintaining the ICE phase-out target for 2030, the government is considering a review of quotas and penalties — which, without pushing back the target, might alleviate pressure on the industry in the short term.
If this happens though, postponing even a proportion of annual electric vehicle production might result in missing the target in the long term, which is just five years away.
It doesn’t have to be that way.
Industry and policymakers can work together. To make net-zero targets work for everyone, an array of tools can be deployed by both parties.
First and foremost, Ford UK is right in asking for buyer incentives to support demand. A French think tank (the Shift Project) has advocated for this policy to be implemented in France to protect and grow the EV industry there.
Such policies (tax exemptions, preferential parking, subsidies, and even access to bus lanes) have been successfully implemented in China and Norway.
Additionally, while the focus has been on electric cars, electrification of vehicles is not the only factor contributing to net zero-aligned targets: reducing vehicle weight and air resistance also plays a significant role in decreasing emissions.
Not only that, it may help meet EV production quotas by producing cars that stay charged longer, have increased performance, and lower costs — making them more attractive to consumers.
Other tools and approaches to solve the current challenges of the industry will be obvious to sector experts, which is why membership organisations have a crucial role to play.
Membership Organisations to Coordinate the Sector
The automotive sector is facing several challenges: ambitious net-zero and EV sales targets, low demand, and competition from specialised manufacturers, leading to plant closures and downsizing.
Membership organisations are ideally positioned to address all of these challenges.
First and foremost, by cultivating an industry-wide perspective, they can differentiate between company-specific issues (such as decisions that may lead to market share loss) and industry-wide problems (like demand levels, competition, policies, and available technologies).
Representing the industry, they can make clear demands to the government, including for buyer incentives, subsidies for innovation, and support for cost-effective technologies.
They are also well-placed to support the training, upskilling, and knowledge dissemination necessary for UK companies and workers to adapt and compete with specialised businesses over the next five years.
Last but not least, professional bodies and trade associations can ensure their members are aligned with 1.5°C goals and provide the support they need to meet net zero targets.
In a nutshell, collaboration between industry and policymakers is as necessary as meeting
net zero-aligned targets.
Membership organisations, with their unique position for both bottom-up advocacy and top-down support, can bridge the gap between policy and industry, supporting coordinated action for a smoother transition.
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