CEO Update

Common sense is the golden rule

19 May 2023 #CEO Update

The Ts and Cs of trade agreements rarely get the public attention they may deserve, but that all changed this week as the rules of origin agreed as part of the UK-EU TCA hit the news headlines – and for good reason. These rules, which from next year apply tougher local content requirements to batteries and electric vehicles, pose significant challenges to manufacturers on both sides of the Channel – with the prospect of tariffs and price increases that would discourage consumers from buying the very vehicles needed to achieve climate change goals.

This is a pivotal moment, as every country in the world is accelerating its transition to zero emission transport, with global competitors offering billions to attract investment in their own automotive industries. The UK cannot afford to be disadvantaged, so a pragmatic solution must be found. There is no need to renegotiate the TCA to do that: a shared political will and simple agreement over a technicality are all that is required to give Britain and Europe more time to establish the local supply chains needed to drive the ZEV transition. Our European counterparts are seeking the same outcome, meaning that this can be resolved quickly, as the rules change on 1 January next year and manufacturers need time to prepare. Otherwise, the uncertainty will deliver its own negative outcomes for markets.

The UK already has many strengths as a location for advanced automotive manufacturing – a skilled and productive workforce, engineering excellence, world leading R&D and a diverse and flexible supply chain that already produces almost every component needed to build EVs. The issue is scale – we urgently need an industrial strategy that creates attractive investment conditions and ramps up our capacity at pace.

Specifically, this will require significant investment in battery production and electrified supply chain capability, at levels that contend with our major decarbonising competitors. Measures are also needed to de-risk private capital, bring down energy costs, reform regulations such as business rates, and promote Britain on the international stage.

The latest SMMT registration figures show another UK advantage – its dynamic auto market. New truck demand grew by 17.1% in Q1, with British-built HGVs particularly popular among UK operators, and the new bus and coach market is stabilising – driven by rising orders of new single and double deckers, which are at the forefront of decarbonised road transport.

Net zero competitiveness and collaboration are key themes of this year’s SMMT International Automotive Summit, bringing together senior executives, stakeholders and industry experts to the IET, London on Tuesday 27 June. Limited early bird tickets are available until Friday 2 June, so don’t miss out on these critical debates that will help to shape the industry for years to come. For further information and to book, contact

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