Fork in the road

The industry’s traditional focus on building petrol and diesel cars is increasingly at odds with sales trends in major markets at home and abroad, with global sales of new fossil fuel cars having peaked almost a decade ago in 2017, and demand for EVs accelerating,   

Three quarters (76%) of UK-made cars are exported, predominantly to markets where EV sales are rising strongly, including in response to the Iran war, and many of which also have long-term EV sales targets.  In the first half of this year, export markets with rising EV sales accounted for 70% of UK car exports, which is about 53% of cars made in the UK.  And accounting for the 24% of UK-made cars that are sold in the UK, about three-quarters (77%) of UK-made cars are sold in markets with rising new EV sales, with exports outweighing domestic sales two-to-one. 

This report analyses trends in EV sales in the UK and major export markets, and models future sales over the next decade, alongside a range of scenarios for the transition of UK car factories to EV manufacturing.   

• The analysis finds that failing to shift production to make more EVs in the UK would lead to a loss of sales, such that economic benefit (GVA) generated by UK car manufacturing could decline by 40% by 2035, costing £70bn over the next decade. This could result in the loss of 127,000 jobs in and supported by the car industry and its supply chains, or 163,000 jobs if induced effects are included (i.e. jobs supported in the wider economy by the spending of people employed in the sector and its supply chains). 
• Conversely, if UK car factories moved more rapidly to producing EVs, successfully transferring and building upon the UK's established reputation and expertise in automotive manufacturing, the sector’s economic impact could grow by 68% by 2035, contributing an additional £87bn to UK GVA over the next decade, and supporting 142,000 new jobs in and supported by the car industry and its supply chains, or 182,000 new jobs including induced effects in the wider economy. 
• The contrast between these possible futures is stark: a difference of £157bn in cumulative economic contribution, and 269,000 jobs in and supported by the car industry and its supply chains, or 345,000 jobs including the wider economy. 

Whilst the choice is clear, the debate is being muddied by claims about the UK’s ZEV Mandate.  The ZEV Mandate’s sales targets help UK drivers, by increasing availability of new EVs – that then make their way to the second-hand market – offering significant cost savings.  But with UK car factories supplying fewer than 10% of the new cars sold in the UK, the ZEV Mandate has less effect on UK car factories than do the policies and sales trends in their major export markets.   

By calling for cuts to the ZEV Mandate, the multinational owners of UK car factories are asking the Government to increase costs for UK drivers by limiting the supply of EVs, whilst not addressing the underlying problem facing UK-based industry, namely not keeping up with global trends and competitors – slow progress towards making more EVs for key markets around the world.