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Executive View: The UK motor industry needs to make Government listen

AM's regular columnist Professor Jim Saker, emeritus professor at Loughborough University's business school and president of the Institute of the Motor Industry, shares his thoughts about the prospects for future production of electric vehicles in the UK since Brexit.

Sometimes I wish that I and others had been wrong.

All the research work done prior to the Brexit vote showed that there was no benefit to the UK car industry from leaving Europe. In fact there were only negatives.

The truth behind this is now being realised.

With Brexit tariff barriers and country of origin specifications kicking in next year it is not surprising that major players like Stellantis and Ford have become more vocal in trying to explain to the UK Government that the situation that the UK negotiated in the ‘Brexit deal’ makes Britain an uneconomic place to manufacture electric vehicles.

Stellantis put it quite succinctly to the House of Commons Select Committee by stating “If the cost of EV manufacturing in the U.K. becomes uncompetitive and unsustainable, operations will close,” with 5000 manufacturing jobs being lost.

With BMW opting to build the new electric Mini in China - although ICE vehicles will continue to be built in Cowley - there doesn’t seem to be much future there after 2030.

An interesting statement came from Matthias Heck of Moodys who argued that companies are going back to the logic of the industrial revolution whereby location was a key factor in setting up businesses. OEM’s are seeking to establish EV battery manufacturing facilities near their automotive plants.

This they argue is due to trying to avoid the complexity of auto industry supply chains which involve crossing international boundaries. However, another argument is that China could easily become an enemy if Taiwan is taken or China sides with Russia over Ukraine.

In a highly significant statement from the recent G7 summit in Japan it was announced that: “We will take steps, individually and collectively, to invest in our own economic vibrancy. We will reduce excessive dependencies in our critical supply chains.”

The western governments are treading a tightrope of trying to build supply chains that don’t rely on China while at the same time keeping the Beijing government happy.

The problem with the UK is that we do not have a sufficient supply of the materials needed to support vehicle battery production.

The same issue applies in Europe but to a lesser extent with supplies currently coming from China but, having reduced mining regulations, there is a pan European effort to locate critical minerals and build giga factories in France, Germany and Italy.

The UK is outside these initiatives.

Unless there is a u–turn followed by a major investment by the UK Government we will see the slow demise of the car industry in this country. Logic states that in such a world of insecurity of supply chains we should have an industrial strategy based on the resources that we do have and concentrate on the development green electricity with the potential for developing a hydrogen-based solution.

The problem is that Boris Johnson’s ‘Oven–ready Brexit deal’ was more half-baked than he was.

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