Alarm bells ringing as EV transition hits auto industry

Alarm bells ringing as EV transition hits auto industry (image courtesy Deposit Photos)
Alarm bells ringing as EV transition hits auto industry (image courtesy Deposit Photos)
Alarm bells ringing as EV transition hits auto industry (image courtesy Deposit Photos)
Alarm bells ringing as EV transition hits auto industry (image courtesy Deposit Photos)

The UK automotive industry has called for urgent government intervention to safeguard the sector and Britain’s zero emission vehicle transition. The call comes as new analysis by the Society of Motor Manufacturers and Traders (SMMT) reveals that weak demand for EVs and the need to fulfil ever-rising sales quotas will cost the industry some £6 billion in 2024, and even more next year – with the potential for devastating impacts on business viability and jobs.

The automotive sector remains committed to delivering a decarbonised road transport sector. Every manufacturer has invested billions, providing a choice of more than 125 zero emission car models and over 30 van models, with rapid improvements in battery technology putting paid to range anxiety. Since the mandate was designed more than two years ago, the original assumptions on which it was founded have not yet been borne out. Market demand has, however, failed to meet ambition, interest rates are steep, raw material and energy prices remain high, and geopolitical tensions and economic uncertainty are impacting global confidence.

The UK is not immune to global pressures with costs stubbornly high and a lack of confidence in perceived chargepoint provision resulting in a reluctant market. When the mandate was unveiled, industry anticipated that 457,000 electric cars would be registered in 2024, which should have accounted for 23.3% of all new car registrations.2 However, the latest outlook shows 94,000 fewer cars will be registered, totalling just 363,000 with a market share of 18.7%. The situation is even worse for vans with the outlook halved to just 20,000 units expected to be registered this year, a 5.7% market share against a 2024 target of 10%.3

The mandated targets have given manufacturers no option but to subsidise sales, incentivising fleet, business and consumer EV sales through an estimated £4 billion worth of discounts.4 Despite this, the industry looks likely to fall short of the 22% EV market share demanded, potentially creating a £1.8 billion bill for compliance for those missing their targets for cars alone, either to government or to competitors, most of whom manufacture their EVs abroad.Van manufacturers will face further costs, with market demand drastically behind the ambition set by the mandate.

The result is a total ‘compliance bill’ of almost £6 billion in 2024 alone, with costs set to mount next year. With global manufacturers already making production cutbacks due to weak EV demand, losses of this scale could force brands to withdraw from the UK market and cause global investors to question the UK’s appeal as a manufacturing destination.

Mike Hawes, SMMT Chief Executive, said, “We need an urgent review of the automotive market and the regulation intended to drive it. Not because we want to water down any commitments, but because delivery matters more than notional targets. The industry is hurting; profitability and viability are in jeopardy and jobs are on the line. When the world changes, so must we. Workable regulation – backed with incentives – will set us up for success and green growth over the next decade.”

Rapid action to stimulate demand and adjust the regulation to reflect market realities is urgently needed to safeguard the sector’s potential to deliver £50 billion in growth over the next decade.6 A robust, competitive market would ensure a greater volume of EVs reach the road more rapidly – a more  important marker for decarbonisation than market share – and encourage greater investment in UK manufacturing and the thousands of jobs it provides.

Notes

BEV car models available Dec 2023: 97; Nov 2024: 126
SMMT market outlook, released February 2023
SMMT market outlook, November 2024, new car and vans to 3.5T
Based on SMMT analysis of AutoTrader data on EV discounts, SMMT estimated fleet discounts and EV car market data, and JATO sales weighted recommended retail price data
Based on SMMT analysis of brand performance of ZEV share and non-ZEV CO2 performance, utilising SMMT car market outlooks to estimate 2024 full year performances, and assuming each manufacturer pays a compliance fee of £15,000 per vehicle. Does not include potential borrowing or credit trading between manufacturers
SMMT Vision 2035

Leave a Comment

Leave a Comment





More in News

Pope Francis receives first electric “Popemobile” from Mercedes-Benz [Photo Gallery]

Mercedes-Benz has supplied cars to the Vatican for 94 years, ...
Sharp's Entry into the Electric Vehicle Market

Discounts drive EV growth amid wider market contraction

Deliveries of new cars fell by -1.9% in the UK ...

Scott Disick embraces British style with his third Urban-modified car – the Range Rover L460 [Photo Gallery]

Urban Automotive, the bespoke modifier of luxury vehicles, has delivered ...

Latest data shows stark reality of EV running cost savings compared to petrol

The average cost of charging an electric vehicle (EV) at ...

Lamborghini Temerario: Hello, Bonjour, Hola, Hej, Merhaba [Photo Gallery]

The new Lamborghini Temerario was presented to European guests in London ...

Trending on Motoring Chronicle

How Many Lamborghini Veneno Were Made

How Many Lamborghini Veneno Were Made?

Lamborghini produced a very limited number of Veneno models. In ...

Caterham welcomes Yamaha Motor in next phase of its EV sports coupe development

Caterham has today announced that Yamaha Motor, a renowned Japanese ...
Why does my key fob not work after replacing car battery

Why does my key fob not work after replacing car battery

When replacing a car battery, it's not unusual for the ...
11-Essential-Things-In-Your-Roadside-Emergency-Kit

11 Essential Things In Your Roadside Emergency Kit

Aside from the usual safety essentials like a flashlight and ...