Full Throttle: Making the UK Automobile Industry Competitive, explains how the government can improve manufacturing competitiveness and help level it out in the move to net zero
The Society of Motor Manufacturers and Traders (SMMT) today unveils an ambitious new plan entitled “Full Throttle: Boosting the Competitiveness of the UK Automotive Industry” to secure the future of one of the UK’s most important industries.
The automotive industry employs around 180,000 people nationwide, contributes £ 15 billion to the economy and is the country’s largest exporter of goods.1 The automotive industry also enables mobility. Cars and other vehicles bring people to work and education, deliver food and goods and support our basic and emergency services, not least during the pandemic. Three quarters of people over 17 in England have a license and 95% of car owners agree that their car gives them significantly more freedom and mobility.2 It is an industry that deserves clear support.
The strategy commissioned by SMMT and written by Public First contains a number of bold policy proposals for the coming year and the rest of the decade, covering all aspects essential to the competitiveness of the automotive industry. UK industry has many strengths – the diversity of its businesses, its technical excellence, innovation, a highly skilled workforce and the strength of the UK market, but global industry is highly competitive and weaknesses need to be addressed if its long-term success and associated benefits are to be achieved – are to be guaranteed.
The strategy calls for a new ‘Build Back Better Fund’ to help transform industry not only in the automotive industry but also in other manufacturing sectors, revolutionizing production lines and overcoming some of the areas where the UK is in cost competitiveness or strategic support falls short – from skills to energy costs. Most importantly, the fund will help the sector transition to net zero and transform our existing manufacturing and supply chain.
The switch to electrified vehicles is the biggest challenge facing the industry. The government is already working with industry to bring additional battery production to the UK, but the report calls for a mandatory target of 60 GWh of battery capacity by 2030. These “giant factories” would give UK manufacturers the ability to produce up to a million electric batteries Vehicles per year and ensure duty-free access to critical markets in the EU.
Finally, to aid the market transition, the report calls for the installation of at least 2.3 million charging points nationwide by the end of the decade. This would ensure that all motorists – especially those with no driveways – have the confidence to invest in the latest zero emission technologies, investments that not only support a healthy domestic vehicle market but also support and contribute to mass market car manufacturing in the UK Climate protection and air quality goals of the country.
There is a lot at stake. In a best-case scenario with a successful transition of the sector to a zero-emissions future with ambitious global trade conditions, there is the potential to create 40,000 new, well-paid and highly skilled jobs in the sector by 2030. This would have a significant impact on the automotive industry in core countries such as the North East and West Midlands which directly help “level” the UK. 3
However, without the competitive environment, the UK auto industry’s risks will decrease. In a worst-case scenario where the sector is stranded, the analysis shows that around 90,000 jobs could be lost compared to the central scenario, with most of them outside London and the Southeast, which is the regional inequality in the UK would increase. 4
Mike Hawes, Chief Executive of SMMT, said at the annual auto industry summit today:
The next few years are a critical phase for the industry. The pace of technological change is accelerating and competition is getting tougher. In order to secure vehicle construction in this country with all the social advantages, decisions have to be made today. The automotive sector is in a unique position to help this government carry out its agenda. to move up, deliver net zero and trade globally. The government has shown its support for the sector in its negotiations with Europe, so now is the time to go full throttle and take bold action in support of one of the UK’s most important industries.
“Full Throttle: Boosting the Competitiveness of the UK Automotive Industry” outlines 12 policy proposals. If implemented together, they will grow the UK sector and drive innovation, productivity and business with benefits for society as a whole. Otherwise, the industry risks falling behind, with declines in production, job losses and economic damage not only in the automotive industry but in many other sectors that the industry supports, from chemicals and steel to finance and advertising.
The 12 policy proposals
Technology & innovation
- Commit to 60 GWh of battery production in the UK through gigafactories by 2030.
- Support the development of a fuel cell gigafactory with 2 GWh capacity to support cars, heavier vehicles and rail vehicles by 2030.
- Introduction of a comprehensive and long-term qualification strategy that supports the need for cars, combined with greater flexibility in the apprenticeship submission in order to support retraining.
- Work to help the UK become a world leader in the development, testing, testing and delivery of Connected and Automated Vehicle (CAV) technology.
Competitiveness in manufacturing
- Introduce a new “Build Back Better Fund” to support good manufacturing jobs for the future and reduce manufacturing costs such as energy.
- Allow net zero critical industries, such as manufacturers of low carbon, hydrogen and battery vehicles, access to the same benefits and remuneration systems as energy intensive industries and get more support under the UK Emissions Trading Scheme (ETS).
- Funding experimental and demonstration projects to study the use of hydrogen during manufacture.
- Make sure the UK tax system helps position the UK as an attractive destination for global investment.
Consumer, market & trade
- Develop a holistic infrastructure strategy to ensure that there will be at least 2.3 million public charging points by 2030.
- Commission an independent review to take a holistic view of the long-term future of fuel taxes and carbon-based taxes like car excise taxes in a decarbonized sector.
- Continue the incentives for plug-in vehicles 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 trading strategy targeting the major markets in the industry.
1: SMMT facts 2020
2: Public First / Findoutnow survey of 589 UK car owners
2: Public First Modeling
3: Public First Modeling
SOURCE: SMMT