UK Car Manufacturing Plunges to 43-Year Low Amid EV Mandate Chaos and Factory Closures
UK car manufacturing has plummeted to its lowest level in 43 years, driven by a combination of factory closures and confusion surrounding the government’s electric vehicle (EV) mandate. In November, the UK automotive industry faced a staggering decline, marking the ninth consecutive month of reduced production. A total of 64,216 cars were manufactured, reflecting a 30% drop from the previous year’s numbers and establishing November as the worst production month since 1980, when only 62,728 vehicles were assembled.
The backdrop to this decline is the ongoing review of the electric vehicle mandate system initiated by the UK government. This system currently imposes financial penalties on manufacturers failing to ensure that zero-emission vehicles account for at least 22% of sales. The intention is to boost this percentage to 80% by 2030 and achieve 100% by 2035. However, car manufacturers are voicing their concerns. They cite cost implications and insufficient consumer demand for electric vehicles as significant challenges.
The economic ramifications of this mandate are notable. The Society of Motor Manufacturers and Traders (SMMT) estimates that the EV mandate could result in a financial burden of up to £5.8 billion on the sector. Despite the criticism and financial challenges, recent data revealed that the UK surpassed its EV sales targets last month, with electric vehicles making up one in every four new car sales.
However, the broader economic landscape for the car manufacturing industry remains bleak. The sector is grappling with competition from Chinese imports and a weaker-than-expected demand for electric vehicles across Europe. The financial strain is compounded by recent announcements of job cuts and factory closures. Ford UK, for example, plans to cut 800 jobs, and the closure of Vauxhall’s Luton plant signifies a broader trend of contractions in the industry. This is not an isolated issue, as Bosch is facing a loss of 5,500 jobs in Germany, and Volkswagen is preparing to close at least three factories, resulting in substantial layoffs.
Compounding these challenges are high borrowing costs and expensive raw materials, which are exacerbating the difficulties faced by car manufacturers. The retooling of manufacturing lines to accommodate electric vehicle production has led to notable declines in production, particularly in June and September. These transitions, necessary for adapting to emerging technological standards, require significant time and investment.
Despite these headwinds, some UK car manufacturers remain resilient. The domestic market has seen a 17.7% increase in production in the first half of 2024, although this positive trend is overshadowed by a 13.9% decrease in production for export, notably to the EU, the largest market. The competition from Chinese imports combined with fluctuating European demand for EVs exacerbates the challenges faced by UK manufacturers.
Against this tumultuous backdrop, influential figures are emphasizing the importance of a solid framework for the EV transition. Colin Walker, Head of Transport at the Energy & Climate Intelligence Unit, stresses the need for rigorous EV mandates. Such mandates can catalyze investments in charging infrastructure and secure the UK car industry’s place in the global market. Ginny Buckley, Founder of Electrifying.com, underscores the significance of the ZEV mandate, which provides a structured timeline for manufacturers to plan production and invest in new technologies. At the policy level, Jonathan Reynolds, the UK business minister, has indicated that the government will consult with automakers to reassess the ZEV mandate, acknowledging industry concerns and highlighting a collaborative approach toward future policies.
