With over a 3rd of all automobile varieties now incorporating battery electrical, hybrid and plug-in hybrid expertise, UK automotive manufacturing is positioned for a sustainable future – if cash-strapped drivers are provided enough purpose to purchase, based on the chief government of the Society of Motor Producers and Merchants (SMMT).

Talking on the Automotive Trade Priorities 2024 webinar forward of the newest UK manufacturing figures for 2023, Mike Hawes stated electrical automobile volumes reached a document excessive by way of quantity in 2023 – though the market share slipped from 16.6 to 16.5%.

The SMMT is searching for authorities assist to stimulate non-public shopper demand for electrical autos and its most popular possibility can be to scale back VAT on electrical autos which may probably put a further quarter of 1,000,000 EVs on the street.

“Once you take a look at diesel and gentle hybrid diesel,” Hawes stated, “you have seen this erosion in demand there supplanted by development particularly in hybrid, plug in hybrid and battery electrical autos. However should you take a look at the expansion each by way of the market and by way of battery electrical autos, that development is pushed by enterprise and fleet. They’ve incentives, the non-public shopper doesn’t which is why we’re asking for governments to scale back VAT on electrical autos from 20% as is now and halve it for 3 years, taking it all the way down to 10%.

“To a sure extent, the Treasury has had a windfall from the shift in the direction of EVs as a result of these autos are some 30-40% costlier. Meaning the VAT receipts are 30-40% better for the Treasury. By giving a few of that again to the buyer so we are able to stimulate the non-public market and it’ll get to the place we need to be.”

Newest SMMT figures for 2023 present complete UK automobile manufacturing, at 1.04 million items, was the perfect 12 months because the 2019 pandemic.

“Clearly, that is nowhere close to the place we had been 4 or 5 years in the past,” stated Hawes, “however we have seen structural modifications going down within the business. “What we have seen is clearly the provision chain points recede. They have not gone away however they’ve receded and that has enabled manufacturing to get again not – simply in UK however in European phrases – nearer to the place it was earlier than the pandemic.

“The important factor we have to develop the business is to construct up the provision chain. The UK truly produces nearly each single element wanted for an electrical automobile however we have to scale up and we have to scale up at tempo as a result of there is a super alternative there. Once we take into consideration a number of the commerce challenges round guidelines of origin, the significance of native manufacturing, not simply the completed automobile, however of the elements and elements that go in there to satisfy these necessities is important.”

Positivity

He spoke of a ‘full change in positivity’ in manufacturing sentiment because of some £2.4bn price of investments in gigafactories and EV manufacturing. “That is greater than one thing just like the final seven years put collectively. It has been a improbable final 12 months and the significance of that can not be underestimated.”

“For a few years securing funding for the UK was actually difficult as a result of we did not know for 4 years whereas Brexit negotiations continued. We had political uncertainty, financial uncertainty. We now have much more stability.”

When it comes to the affect of a forthcoming Common Election, he stated the business view is that the UK stays a robust and place to speculate and identified that of the £4.5bn of central funds destined for UK manufacturing, over £2bn went to automotive.

“We aren’t the largest manufacturing sector within the UK however we bought the lion’s share of that cash as a result of the significance of this sector to internet zero, to jobs, to safety, to financial development is recognised.”

“Whereas the Conservative Authorities has established a set of insurance policies that are the constructing blocks for supporting the business, that is one thing that we clearly need to see proceed whoever wins the following election. Numerous what Labour is saying can be an endorsement of what of what it’s that we’re searching for.”

He famous that in October, the Labour Social gathering revealed a plan for the automotive sector, the primary of its sector plans. “If you happen to learn by means of it, it accommodates quite a lot of what we’re asking for. Maybe that’s no accident as a result of we have had excellent engagement with Labour in the identical approach we have had excellent engagement with ministers.”

“We see Labour doing issues a bit of in a different way. It would need a extra constructive relationship with Europe and there is a likelihood to reset. Provided that there will be a change of parliament in Europe and probably a change of presidency right here,  Labour could take a look at incentives to recommit to internet zero.”

“Definitely, the engagement we have had with offers us a level of encouragement ought to they kind the following authorities. If they do not? Once more, our engagement with ministers have been extremely supportive.”