Britain cannot reindustrialise without the suppliers that underpin local vehicle manufacturing. Yet high costs, falling production volumes and uncertainty over future programmes are putting critical businesses at risk before they can take advantage of new work opportunities that will arise. And once their skills and capabilities are lost, rebuilding them is nigh on impossible.
The warning signs are clear. Insolvencies among UK component manufacturers have risen approximately 180% over the past decade, compared with around 63% across all UK businesses. Some suppliers report operating at half capacity, driving up component costs and squeezing investment. So the jeopardy is real, not just for essential components for electric vehicles but for all powertrains.
There is, however, a significant opportunity for industry and government to turn the tide. SMMT’s latest report identifies a £6.4 billion opportunity of potential annual spend on priority components for the UK by 2030. Winning that business would strengthen resilience, safeguard skilled jobs and retain more value in Britain. But suppliers must be competitive enough, and with sufficient capital, to secure it.
Our proposed Automotive Productivity Accelerator would build on existing supplier transformation pilots, with capital grants for automation, robotics, AI and digitalisation, alongside support for skills. Match-funded support for diversification into aerospace and defence, and dedicated tooling finance to ease upfront programme costs would also help to protect critical capability – alongside extending DRIVE35 funding to components used across all powertrains.
Industry must play its part by raising productivity, improving demand visibility and better aligning capacity to production volumes. Government must also help by tackling energy, employment and business rate costs, securing full inclusion in the EU’s ‘Made in Europe’ policy, and reforming the UK’s ZEV Mandate to support a commercially viable market.
The importance of getting the ZEV Mandate review right cannot be stressed enough. Decarbonising road transport is an absolute imperative – but as we have seen this year, a mandated trajectory far above real-world demand undermines businesses and threatens future investment in the very industry needed to deliver the EV transition. That is not net zero leadership. Substantial and meaningful change, not marginal tinkering, is therefore needed; otherwise, model rollout, profitability, jobs and production capacity will all suffer.
At the same time, the UK can demonstrate genuine world leadership by tackling the disincentives to uptake such as the higher VAT on public charging, the patchy regional rollout of charging infrastructure, and the introduction of the EV-specific tax, eVED, in two years’ time. Addressing these barriers and implementing a trajectory that is viable for industry would ensure businesses can continue to invest in the model choice, which will give consumers the confidence that now is the time to switch.
That is the outcome which everyone invested in this transition should support.
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