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Record Private Investment Fuels UK Automotive Industry’s Green Growth

by Anna

In a groundbreaking development for the UK automotive sector, the Society of Motor Manufacturers and Traders (SMMT) has revealed that the industry attracted an impressive £20 billion in private investment throughout 2023. This milestone marks a significant leap forward, surpassing the combined investment of all the years since 2016.

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Last week, the UK government reinforced this positive trend by pledging an additional £2 billion for the sector. This commitment, supported by an Advanced Manufacturing Plan and battery strategy, is poised to stimulate green economic growth and generate employment opportunities nationwide. This comes amid a backdrop where nearly a million individuals directly depend on the automotive sector for their livelihoods, underscoring its paramount importance to the nation’s economy.

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Addressing industry leaders and policymakers at the SMMT’s 106th Annual Dinner in London, Alison Jones, SMMT President and Senior Vice President Global Circular Economy at Stellantis, commended the industry’s resilience and dedication to sustainable growth. She emphasized the industry’s capacity to forge ahead despite challenges such as legislative uncertainties, inflation, and geopolitical risks.

“As an industry, we have made substantial investments in battery production, lithium mining, vehicle manufacturing, R&D, and the aftermarket to secure jobs and ensure our future,” Jones stated. “Such investments are pivotal to maintaining a robust UK manufacturing base that sustains nearly a million livelihoods.”

With recent investment announcements solidifying the UK’s status as a competitive hub for manufacturing zero-emission vehicles, batteries, and components, factories across the country are now producing a diverse range of electric vehicles, from cars and vans to buses and trucks. The industry aims to return to pre-pandemic levels of trade, exceeding £100 billion by the end of the year. However, the challenge lies in scaling up further to capitalize on the opportunities presented by decarbonization.

Despite this renewed confidence, the industry’s potential for driving economic growth faces a potential setback without a deferral of upcoming Rules of Origin. Failure to address this issue could result in tariffs, hindering trade in electric vehicles between the UK and the EU.

Recognizing the urgency of the situation, the UK government and major European nations have called for a sensible solution to ensure the free and fair flow of EVs across the Channel. However, time is running out to secure a deal before the year-end deadline.

While exports still constitute around 80% of production, a robust domestic market is crucial to maximizing returns on investments. Although EV uptake initially experienced strong growth, particularly in the business and fleet markets, efforts are needed to encourage private consumers to make the switch for a fair transition.

Mike Hawes, SMMT Chief Executive, emphasized the importance of aligning incentives for business and private buyers. He stated, “The industry is betting big on Britain, and the government has rightly recognized the value that automotive manufacturing brings to the UK.” Hawes highlighted the need for incentives for private buyers to ensure a faster and fairer decarbonization of Britain, benefiting millions with access to zero-emission mobility.

To accelerate the mainstream adoption of EVs, the SMMT proposes measures such as halving VAT on new EVs. This affordable and compelling initiative would enable manufacturers to deliver larger volumes of zero-emission vehicles, fostering greater investment in the UK supply chain—a key objective of the government’s Advanced Manufacturing Strategy.

Coupled with retaining business incentives and expediting the rollout of charging infrastructure, these proposals aim to expand the new EV market, eventually flowing into the used sector. This comprehensive approach is viewed as the fastest way to decarbonize road transport, a crucial step in achieving Net Zero.

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