Automotive News Europe — 2024-07-03
Automotive Industry
The Labour Party plans to restore a 2030 ban on new gasoline and diesel car sales.
More than three years have passed since Coventry unveiled plans for a giant electric-car battery factory at its small airport in England’s West Midlands, offering hope that the UK could catch up with rival countries already years ahead in cell production.
But with no major customer or investor, the project has yet to get off the ground, making hollow its target to produce batteries by 2025.
Its struggles are emblematic of why the UK’s car industry is foundering.
The 4 July 2024 general election could provide a boost.
The Labour Party, which is leading in polls, plans to restore a 2030 ban on new gasoline and diesel car sales — a move that may finally help the site attract investors put off by mixed messages from the government and the broader EV slowdown.
“That will change the dynamic,” Richard Moore, a former auto executive who is spearheading the project, said in an interview at the UK Battery Industrialisation Centre next to the airport.
The current Conservative government has no clear strategy, leaving potential investors wondering how they would access any state support, Moore said.
The auto industry has been crying out for change since the Conservatives came to power in 2010, presaging a steady decline in car manufacturing. Executives’ biggest complaint is mixed signals from government, noting that Brexit sowed confusion about trade.
The decision to push back the ban on new gasoline and diesel car sales by five years created more uncertainty about the country’s commitment to EVs.
“They have probably done more damage to the UK car industry than any other administration, on both sides, in the past 50 years,” said Andy Palmer, the former CEO of Aston Martin and current chairman of EV charging company Pod Point Group Holdings.
“The world’s car companies are confused in terms of what to expect from the UK That has broken one of the major merits of investments in the UK, which is it’s understandable and predictable,” Palmer said.
Lagging investment
Once the world’s second-largest car manufacturing hub in the 1950s, the UK has dropped to 18th as of 2023, according to the International Organization of Motor Vehicle Manufacturers.
The country’s efforts to become an early adopter of electric vehicles has stalled, with only one in six new cars registered in 2023 being battery-electric — in line with the year before (2022).
The UK is not alone with regard to battery disappointment. Production plans have sputtered across Europe, where countries are struggling to compete with lucrative financial incentives in the US and the stranglehold China has on cell manufacturing.
“The very first question any government coming in has got to ask is: Do we want to stay in the car business?” Palmer said. “Because ultimately, if you want to stay in the car business, you have got to make a lot of investment.”
In 2023, the Conservative government committed $2 bn ($2.5 bn) to the EV transition, though it also has vowed to reverse an expansion of London’s Ultra-Low Emission Zone that penalizes older, more polluting vehicles.
Labour has pledged $1.5 bn toward new cell factories and committed to a battery-health standard that it says will support the second-hand market for EVs.
Emissions politics
Both main parties have promised to fix potholes and roll out EV charging infrastructure, but neither has committed to financial incentives to encourage consumers to buy EVs.
Labour also plans to stick with the zero-emission vehicle mandate introduced by the Conservative government earlier in 2024.
This requires at least 22% of cars sold to be full-electric this year, rising to 80% by 2030. Automakers face fines of up to 15,000 pounds per vehicle for missing the targets.
Stellantis’s UK boss Maria Grazia Davino last week (June 2024) threatened to close van factories in northwest England’s Ellesmere Port and Luton, near London, if the government does not ease targets or introduce consumer incentives.
The maker of Peugeot and Vauxhall vehicles employs 2,500 people across the two facilities.
Government investment will be key to enticing the sort of foreign investors that Moore wants in Coventry.
The area formerly known as the UK’s Motor City is still home to Jaguar Land Rover, Britain’s biggest automaker.
In a blow to the Coventry project, JLR’s owner, India’s Tata Motors, decided in 2023 to build a 4-bn-pound battery factory in Somerset, with the help of taxpayer support.
The government also offered aid to get Nissan to make electric successors to its Qashqai and Juke models in Sunderland.
The UK is still lagging rival countries when it comes to battery manufacturing capacity, with only one operational factory run by Envision AESC in Sunderland for Nissan, producing less than 2 gigawatt hours of battery capacity a year.
For the automotive industry alone, the UK will require at least 100 GWh a year by the end of the decade, according to a 2022 report from the Faraday Institution. The collapse in 2023 of battery startup Britishvolt cast a shadow over the sector.
“No one is going to take us seriously” until the UK can produce at least 20 GWh a year, said Moore, whose site has planning permission for up to 60 GWh, enough to power 600,000 EVs.
Jim O’Boyle, a Labour council member in Coventry who used to work at a car factory, blames the government for the lack of progress at the project.
“The frustration has been clear here because they just do not seem to see it as that important,” O’Boyle said. “I do not think they have understood what the potential benefits are here, never mind what the potential risk is here.”