With over a 3rd of all car sorts 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, in keeping with the chief govt of the Society of Motor Producers and Merchants (SMMT).

Talking on the Automotive Business Priorities 2024 webinar forward of the most recent UK manufacturing figures for 2023, Mike Hawes stated electrical car volumes reached a report excessive when it comes to quantity in 2023 – though the market share slipped from 16.6 to 16.5%.

The SMMT is looking for authorities help to stimulate non-public client demand for electrical automobiles and its most popular possibility can be to cut back VAT on electrical automobiles which might probably put an extra quarter of 1,000,000 EVs on the street.

“Whenever you have a look at diesel and gentle hybrid diesel,” Hawes stated, “you’ve got seen this erosion in demand there supplanted by development particularly in hybrid, plug in hybrid and battery electrical automobiles. However in the event you have a look at the expansion each when it comes to the market and when it comes to battery electrical automobiles, that development is pushed by enterprise and fleet. They’ve incentives, the non-public client doesn’t which is why we’re asking for governments to cut back VAT on electrical automobiles from 20% as is now and halve it for 3 years, taking it right 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 automobiles 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 patron 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 whole UK car manufacturing, at 1.04 million items, was the perfect yr 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 availability 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 vital factor we have to develop the business is to construct up the availability chain. The UK truly produces nearly each single part wanted for an electrical car 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 among the commerce challenges round guidelines of origin, the significance of native manufacturing, not simply the completed car, however of the components and parts that go in there to satisfy these necessities is vital.”

Positivity

He spoke of a ‘full change in positivity’ in manufacturing sentiment on account 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 unbelievable final yr and the significance of that can’t 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.”

By way of the impression of a forthcoming Basic Election, he stated the business view is that the UK stays a robust and a superb place to take a position and identified that of the £4.5bn of central funds destined for UK manufacturing, over £2bn went to automotive.

“We’re not the most important manufacturing sector within the UK however we received 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. Quite a lot of what Labour is saying can be an endorsement of what of what it’s that we’re looking for.”

He famous that in October, the Labour Occasion revealed a plan for the automotive sector, the primary of its sector plans. “In case you learn via it, it comprises a number of what we’re asking for. Maybe that’s no accident as a result of we have had superb engagement with Labour in the identical approach we have had superb engagement with ministers.”

“We see Labour doing issues a bit in a different way. It would need a extra optimistic 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 have a look at incentives to recommit to internet zero.”

“Definitely, the engagement we have had with provides 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.”