UK car exports on a cliff edge

In 2022, the UK exported almost 80% of the vehicles it produced – 606,838. A considerable majority of these exported vehicles went to three key markets – the European Union (57.6%), the United States (13.3%) and China (8.7%)

Critically, 71% of the markets to which the UK exports are introducing Zero Emission Vehicle (ZEV) mandates. These will set targets for manufacturers for the minimum percentage of cars that they sell that must be zero emission. By 2030, 40% of the vehicles sold in China will need to be zero emission. In the US, 16 states (representing around 5% of the market for the UK’s car exports) will require 68% of cars sold to be zero emission. In the EU, a ZEV mandate has been agreed that will require the average emissions of all vehicles sold by a manufacturer in 2030 to be 55% lower than 2021 – this will, in practice, require a significant portion of the vehicles sold to be zero emission.

The UK’s car industry is currently a long way short of producing such high proportions of BEVs. Of the 775,014 cars it produced in 2022, around 73,600 were BEVs – this equates to 9.5% of total production. If steps are not taken to enable the UK’s car industry to increase BEV production levels to meet the targets being set in its major export markets, then export income will fall dramatically.

This is because the number of internal combustion engine cars that a manufacturer will be able to sell in these markets will have to be reduced significantly to ensure that the number of BEVs being sold meets the required percentage. For example, a car manufacturer sells 100,000 cars in a market, 9.5% of which are BEVs – 9,500. The market then introduces a target of 50% for the proportion of new cars sold that need to be BEVs. If the car manufacturer is unable to increase BEV production up from 9.5% of total cars produced then, to meet the 50% target, it will have to reduce non-BEV production to the point that 9,500 BEVs represents 50% of the vehicles sold. This would require reducing the number of non-BEVs sold in that market from 90,500 to 9,500 – a loss of 81,000 vehicle sales.