UK aims to be back in top 15 global car makers by 2030

The UK is aiming to once again become one of the world's top 15 vehicle production locations, following the government's unveiling of a new 10-year industrial strategy which promises significant savings and better trading conditions for manufacturers. Revealed yesterday, the new industrial strategy provides the foundation for substantial reductions in commercial energy costs, favourable investment conditions, enhanced skills development and improved trading terms for UK-based manufacturers, and the automotive industry aims to use it as a “springboard” for substantial growth. The Society of Motor Manufacturers and Traders (SMMT) which represents the UK's automotive industry, welcomed the announcement with a new 10-point plan that aims to "build on the foundation" of the industrial strategy to make the country one of the world's top 15 vehicle manufacturing sites by 2030 - delivering a £50bn boost to the economy in the process. Included in the SMMT's 10 recommendations are the introduction of new EV purchase incentives for retail buyers, a clear roadmap for bus and HGV decarbonisation, a public charger mandate, a strengthening of the EU-UK trade relationship and the securing of new trade deals with other important global markets. One of the most important points in the this 10-step plan is to "reduce the cost of energy and support manufacturers to remain internationally competitive" - a particularly pertinent initiative given that UK manufacturers currently pay more for electricity than anywhere else in Europe. Under the framework of the industrial strategy, the government will invest more than £2bn over the next four years to cut energy prices by up to 25% for more than 7000 businesses, including those in the automotive sector. It has not yet said, though, exactly which businesses are eligible. According to the SMMT, a UK vehicle factory currently pays more than double the European average in energy costs, partly due to energy taxes some six times higher. The trade body called for "rapid implementation" of the energy cost reform proposition, estimating that it could amount to a 20% reduction in the sector's electricity bill, which would "help to ease this structural disadvantage". The government has also proposed a relief on standing charges for energy-intensive industries – including battery manufacturing – which the SMMT argues should also apply to the wider automotive sector, as the shift from ICE to EV powertrains naturally drives up manufacturers' electricity demands. If the government does include auto makers in that exemption, it could amount to another 20% saving for manufacturers. Mike Hawes, SMMT chief executive, laid bare the importance of bringing manufacturing costs down as soon as possible: "Electricity costs remain, as we speak, the highest in the world. Internationally, we're ranked worst for business rates, amongst the worst for the burden of government regulation and capital allowance. “And with these natural conditions causing problems beyond our control, it makes sense to ease the burdens we do control, and that means a whole government approach to competitiveness." He added: "We need to cut those costs our rivals do not face now [...]. We need a compelling offer that redefines the UK's appeal as a place to invest". That is particularly important in the context of the UK's goal to become a top 15 global vehicle manufacturer by 2030 - as laid out in the industrial strategy. That's tied to a targeted output of 1.35m vehicles - up from just under a million now, and an amount that Mike Hawes says will likely depend on new manufacturers beginning production in the UK. "For us to get where we need to go, we want to see incumbents grow, but we're also very open to new entrants. "Given where we are, that would probably need a new entrant coming into the UK, and that depends on having a process that's attractive to build here." He mentioned no names, but Chinese firms including MG-owner SAIC and Omoda-Jaecoo owner Chery have previously expressed interest in building cars in the UK, and a government official at the SMMT Summit indicated that Changan – which is about to launch its Deepal EV brand in the UK – is aiming to set up a network of UK assembly facilities in the coming years. Steve Turner, assistant general secretary, at trade union Unite, agreed that the UK needs to attract new manufacturers - and that means making it more enticing to build vehicles here. “We’ve got a whole series of things that need address: whether that's planning regulations, opening up the market, trying to address the question of low-volume production in the UK, trying to get to the target of 1.35 million vehicles - but no real clear plan about how we're going to get there, and what it takes to get there. “We're not going to do it with the current footprint of plants in the UK, so we need to attract - and that goes back to the discussion of the Chinese approach.”