Failure to develop electric car industry puts £13bn of UK exports in jeopardy
Key export markets accounting for 56% of current UK car production have EV targets that will see demand for petrol cars fall dramatically by 2030.
By Tricia Curmi
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New analysis from the Energy and Climate Intelligence Unit (ECIU) has found that £13.3bn of car exports could be in jeopardy if the UK doesn’t speed up its transition to manufacturing electric cars [1].
Currently, 80% of cars built in the UK are exported. Of these 71% (i.e. 56% of total UK car manufacturing) go to three large markets, all of which have EV targets that will heavily restrict the sale of petrol and diesel vehicles: the EU (57.6% of exports), China (8.7% of exports), and the US where 16 American states including California have EV mandates (c.5% of exports).
If the UK fails to respond and develop its EV manufacturing base further, a conservative scenario suggests that these markets’ EV policies in 2030 would cause the value of UK car exports to the EU to fall by £10.9bn, to China by over £1.45bn, and to the 16 US states by over £917m – over £13.2bn in total. This would represent a fall in car export revenue of 59%.
Colin Walker, Transport Analyst at ECIU, said: “There are clearly a lot of factors at play here, but the scale of export loss from not keeping pace with the world’s charge towards EVs would be very significant for the UK. With the US and EU racing to turn their car industries electric, in the UK JLR’s battery factory investment decision still hangs in the balance.
“The world is investing trillions into the net zero transition. The UK is yet to stump up the level of cash incentives, tax cuts or regulatory reform to retain and attract businesses rushing to take advantage of the incentives on offer in the US and EU. The Government’s response to the US’s Inflation Reduction Act is now not due until the Autumn.
“Before then the Government could send a clear signal of intent to support the electric transition by finalising its Zero Emission Vehicle Mandate – targets increasing year on year for the minimum % of zero emission vehicles that a car manufacturer has to sell – which is due to be confirmed in the next couple of months.” [2]
The UK exported 606,838 cars in 2022 and manufactured 73,600 EVs.
Previous ECIU analysis found that a slower roll-out of electric cars under the UK’s proposed UK Zero Emission Vehicle Mandate would see a smaller pool of second-hand EVs leading to buyers paying an extra £9bn in the coming years to run more expensive small to mid-sized petrol cars [3].
There are almost 20,000 businesses currently within the net zero economy which are contributing £71 billion (3.7%) in Gross Value Added (GVA) to the UK economy [4].
Notes to editors:
1. The report, UK car exports on a cliff edge, is available here: https://eciu.net/analysis/reports/2023/uk-car-exports-on-a-cliff-edge
2. A ‘Zero Emission Vehicle (ZEV) Mandate’ is a set of targets that requires manufacturers to ensure an increasing proportion of the cars they sell in a particular market are zero emission i.e. Battery Electric Vehicles (BEVs). The UK is introducing such a mandate in 2024 – it will require, for example, 22% of new cars sold in 2024 to be zero emission, 38% in 2027, 80% in 2030, and 100% by 2035.
3. https://eciu.net/analysis/reports/2023/embargoed-27-feb-the-uks-second-hand-car-market
4. https://eciu.net/analysis/reports/2023/mapping-the-uk-net-zero-economy
For more information:
George Smeeton, Head of Communications, ECIU, Tel: 07894 571 153, email: george.smeeton@eciu.net