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Supply chain turmoil and economic headwinds still pose major challenges to the UK car industry and its transition to electric vehicles, trade body SMMT has warned.
UK electric vehicle production continued to grow, with sales up by more than a fifth, as domestic car production started to grow again in October, according to the latest industry figures released today.
Automakers produced more than 24,000 electric vehicles, including battery electric vehicles, hybrids and plug-in hybrids, last month, up more than 20 percent from September, trade association SMMT said today.
This means that, as demand for zero-emission models continues to grow, UK car factories have produced a record 61,300 pure electric vehicles in 2022, an increase of more than 16% on the same period last year.
It marks a series of new milestones for the UK’s booming battery car industry, which set a new export record in September when one in seven cars exported from the UK was an all-electric model. Domestic sales are also booming: more than a million plug-in cars have been registered in the UK so far, a quarter sold since January alone.
However, despite the positive growth in electric vehicle numbers, there are still significant economic and supply chain headwinds for the UK car and battery industries, as the UK economy is already suspected of being in recession and since Brexit, trade with Europe and beyond has fallen.
Britain is trying to build a strong domestic supply chain for key components such as electric car batteries and semiconductors.
High-profile start-up battery maker BritishVolt in particular faces major financial challenges as it tries to implement its plans to build the UK’s first electric car battery “gigafactory” in Northumberland.
UK-based electric van specialist Arrival is also struggling with cash flow as it tries to expand its manufacturing capacity to meet rising demand. The company’s billionaire founder and CEO will reportedly step down today. Denis Sverdlov, who remains a major shareholder in the company, will take over as chair of the board after being replaced by former Marvel Entertainment head Peter Cuneo.
Nasdaq-listed Arrival was forced to abandon plans to make electric vans and buses in the UK, shifting its focus to the US in recent months as it grapples with cash flow challenges.
Meanwhile, SMMT chief executive Mike Hawes said the ongoing disruption in supply chains had also hit the auto industry hard, which in turn threatened to slow growth in the UK’s electric vehicle sector.
“UK car makers are doing all they can to ramp up production of the latest electrified vehicles, and help deliver net zero, but more favourable conditions for investment are needed and needed urgently – especially in affordable and sustainable energy and availability of talent – as part of a supportive framework for automotive manufacturing,” he said.
The government claims it is spending billions of pounds on developing the UK’s electric car supply chain and charging network, which could help stimulate demand for electric vehicles.
Industry insiders, however, remain frustrated with the level of support after some leading car companies opted to set up new electric vehicle production lines in Europe. The government’s decision to cut subsidies for new electric cars and the Treasury’s announcement last week that it would introduce a motor vehicle excise tax on electric vehicles from 2025 have also drawn criticism, with campaigners highlighting that the introduction of electric vehicles in the UK lags behind neighboring markets such as Germany. Netherlands and Norway.
In related news, London Mayor Sadiq Khan confirmed today that the capital’s Ultra Low Emissions Zone, which imposes fees on older and polluting vehicles, will be extended across the city.
Under the scheme, drivers of the most polluting cars will have to pay £12.50 a day to meet the Greater London Authority’s limit from August 29 next year.
“The ULEZ so far has been transformational, reducing harmful pollution levels by almost a half in central London,” Khan said. “But there is still far too much toxic air pollution permanently damaging the health of young Londoners and leading to thousands of early deaths every year, with the greatest number of deaths in the outer London boroughs.”
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