CEO Update

Market transformation needs the right government support

05 July 2019 #CEO Update

Today’s announcement from JLR is a massive boost for the industry and a welcome commitment to the manufacture of zero emission vehicles. UK Automotive is well placed to be a global research and development hub for these technologies but the challenge is to turn this expertise into production capability, making the most of our skilled workforce and history of delivering high quality, well-engineered cars.

To ensure the UK plays a central role in the ongoing transformation we need world-class, long-term incentives and substantial investment in infrastructure, not just charging points but in battery production. Welcome as recent investment in this area is, to secure future success we need more giga-scale battery production facilities in the UK. This will help us to build the next generation of electric vehicles here at a cost more affordable to manufacturers and consumers. There’s also a substantial challenge to the supply chain here as technologies shift because domestic battery manufacture is essential if we’re not to be totally dependent on components from overseas.

On that note, the downward trend in the new car market so far this year is a major concern, but a worrying new feature in this month’s figures is the fact that sales of alternatively fuelled vehicles have dropped for the first time in more than two years. We need a strong domestic market for electrified vehicles and other technologies if we are to secure inward investment. So, while it is reassuring to see battery electric vehicles continue to grow strongly, even if uptake lags behind the rest of Europe, the decline in PHEV demand and overall market softness is bad news. We’ve seen registrations of plug-in hybrid electric cars fall since the chancellor announced the scrapping of the grant for PHEV purchases in the autumn Budget last year, and so far this year the market for them is down nearly 30%.

Manufacturers have invested and are committing further billions to bring the latest ultra low emission vehicles to market, but their efforts are being undermined by confusing policies and the premature removal of purchase incentives. These new technologies need long term support to become established as awareness grows and consumers get on board. The fundamentals of the UK motor industry are strong, and if the right choices are made, a bright future is possible.