VW factory closures highlight consequences of going slow on EVs: comment

“This is a sad consequence of an industry that is dragging its heels in making the transition to building EVs, rather than embracing it.

“Here in the UK, 80% of the cars we build are exported, the majority of which go to markets that are phasing out the sale of petrol and diesel cars and shifting to electric. If our car industry doesn’t alter production to match these trends, it faces a very uncertain future.

“A recent report by CBI Economics has found that failing to support the UK’s car industry in making the switch to electrification could see the its economic output fall by 73%, or £34bn, with more than 400,000 jobs being lost. Conversely, get it right and invest in a speedier transition, and the industry’s contributions to the UK economy could increase by over £16bn, with more than 167,000 new jobs being created.

“Events in Germany have starkly brought these findings to life, and make it clear to anyone concerned about the future prosperity of the UK’s car industry that slowing down the transition to EVs will only serve to hasten its demise. Its future hinges on it making a rapid and successful transition to electrification and Government will need to support in that”.

A report commissioned by the Energy and Climate Intelligence Unit (ECIU), with analysis provided by CBI Economics [2], reveals that Gross Value Added (GVA) contributions of the automotive industry to the UK economy could vary by over £50bn, depending on how rapidly the sector transitions to the manufacture of Battery Electric Vehicles (BEVs). A rapid transition could see economic contributions increase by over £16bn by 2035, with 167,000 extra jobs created. Go slow, or stagnate, and the economic contributions of the sector could fall by a staggering 73%, or £34bn. Over 400,000 jobs could be lost as the industry contracts. 

Andy Palmer, Founder and CEO of Palmer Automotive, said: “It’s a tough environment right now for the legacy autos. The VW news proves that the road ahead will be bumpy.

“Companies like BMW , Nissan and Renault were pioneers in EVs. Some interesting strategic choices have caused distractions from their path towards electrification - it’s little to do with Chinese competition.

“There’s a real danger that western carmakers will get more out of touch with cutting edge technologies as they need to restructure their legacy business models. We must realise this is about a technology advancement. The only true constant in life is change, and the market is facing the biggest changes of its lifetime.”

Stellantis and VW have recently warned of the dangers of trying to slow down the EV transition, describing it as a trap for the industry that would result in a prolonged period in which they would have to invest in both traditional engines and battery-powered cars. They called on Governments to act to speed up the transition. [3]