UK EV industry hit by a failure to electrify

EV

The UK car manufacturing industry faces a 60 per cent drop in export income if the industry fails to increase EV production levels.

The proportion of BEVs (battery electric vehicles) sold must rise as petrol and diesel vehicles are phased out but the UK is falling behind on EV production and this will impact the industry’s ability to export vehicles.

In 2022 the UK exported almost 80 per cent of the vehicles it produced – 606,838. The majority of these exported vehicles went to three key markets: the European Union (57.6 per cent), the United States (13.3 per cent) and China (8.7 per cent).

Critically, 71 per cent of the markets to which the UK exports are introducing Zero Emission Vehicle (ZEV) mandates. These will set targets for manufacturers for the minimum percentage of cars that they sell that must be zero emission.

By 2030, 40 per cent of the vehicles sold in China will need to be zero emission. In the US, 16 states (representing around five per cent of the market for the UK’s car exports) will require 68 per cent of cars sold to be zero emission. In the EU, a ZEV mandate has been agreed that will require the average emissions of all vehicles sold by a manufacturer in 2030 to be 55 per cent lower than 2021 – this will, in practice, require a significant portion of the vehicles sold to be zero emission.

The UK’s car industry is currently a long way short of producing such high proportions of EVs. Of the 775,014 cars it produced in 2022, around 73,600 were BEVs – this equates to 9.5 per cent of total production. If steps are not taken to enable the UK’s car industry to increase BEV production levels to meet the targets being set in its major export markets, then export income will fall dramatically.

This is because the number of internal combustion engine cars that a manufacturer will be able to sell in these markets will have to be reduced significantly to ensure that the number of BEVs being sold meets the required percentage.

For example, a car manufacturer sells 100,000 cars in a market, 9.5 per cent of which are EVs – 9,500. The market then introduces a target of 50 per cent for the proportion of new cars sold that need to be BEVs. If the car manufacturer is unable to increase EV production up from 9.5 per cent of total cars produced then, to meet the 50 per cent target, it will have to reduce non-BEV production to the point that 9,500 BEVs represents 50 per cent of the vehicles sold.

This would require reducing the number of non-BEVs sold in that market from 90,500 to 9,500 – a loss of 81,000 vehicle sales.

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