The UK automotive industry has called for urgent government
intervention to safeguard the sector and Britain's zero emission
vehicle transition.
The call comes as new analysis by the Society of Motor
Manufacturers and Traders (SMMT) reveals that weak demand for EVs
and the need to fulfil ever-rising sales quotas will cost the
industry some £6 billion in 2024, and even more next year – with
the potential for devastating impacts on business viability and
jobs.
The automotive sector remains committed to delivering a
decarbonised road transport sector. Every manufacturer has
invested billions, providing a choice of more than 125 zero
emission car models and over 30 van models, with rapid
improvements in battery technology putting paid to range anxiety.
Since the mandate was designed more than two years ago, the
original assumptions on which it was founded have not yet been
borne out. Market demand has, however, failed to meet ambition,
interest rates are steep, raw material and energy prices remain
high, and geopolitical tensions and economic uncertainty are
impacting global confidence.
The UK is not immune to global pressures with costs stubbornly
high and a lack of confidence in perceived chargepoint provision
resulting in a reluctant market. When the mandate was unveiled,
industry anticipated that 457,000 electric cars would be
registered in 2024, which should have accounted for 23.3% of all
new car registrations.2 However, the latest outlook shows 94,000
fewer cars will be registered, totalling just 363,000 with a
market share of 18.7%. The situation is even worse for vans with
the outlook halved to just 20,000 units expected to be registered
this year, a 5.7% market share against a 2024 target of 10%.3
The mandated targets have given manufacturers no option but to
subsidise sales, incentivising fleet, business and consumer EV
sales through an estimated £4 billion worth of discounts.4
Despite this, the industry looks likely to fall short of the 22%
EV market share demanded, potentially creating a £1.8 billion
bill for compliance for those missing their targets for cars
alone, either to government or to competitors, most of whom
manufacture their EVs abroad.5 Van manufacturers will face
further costs, with market demand drastically behind the ambition
set by the mandate.
The result is a total ‘compliance bill' of almost £6 billion in
2024 alone, with costs set to mount next year. With global
manufacturers already making production cutbacks due to weak EV
demand, losses of this scale could force brands to withdraw from
the UK market and cause global investors to question the UK's
appeal as a manufacturing destination.
Mike Hawes, SMMT Chief Executive, said, “We need an urgent review
of the automotive market and the regulation intended to drive it.
Not because we want to water down any commitments, but because
delivery matters more than notional targets. The industry is
hurting; profitability and viability are in jeopardy and jobs are
on the line. When the world changes, so must we. Workable
regulation – backed with incentives – will set us up for success
and green growth over the next decade.”
Rapid action to stimulate demand and adjust the regulation to
reflect market realities is urgently needed to safeguard the
sector's potential to deliver £50 billion in growth over the next
decade.6 A robust, competitive market would ensure a greater
volume of EVs reach the road more rapidly – a more
important marker for decarbonisation than market share –
and encourage greater investment in UK manufacturing and the
thousands of jobs it provides.
