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UK car industry under threat without help. Subscribe to Electric Vehicle News Bitesize Podcast for FREE to hear more!

The UK car industry could disappear if the government does not follow the example of the US and EU in helping to switch to electric vehicles, an industry senior says.

Andy Palmer said car companies would “likely” leave the UK without a huge subsidy package similar to the billion-dollar backing offered by the US.

Palmer, who has held senior positions at Nissan and Aston Martin, added that the industry was facing a “last-ditch effort”.

The chancellor has said the UK will not go “toe-to-toe” with the US and EU.

Jeremy Hunt says the UK has a “better” way of attracting investment.

Mr Palmer is now chairman of battery company InoBat, but previously served as Nissan’s chief operating officer and was a former chief executive of Aston Martin.

He told the BBC’s Today program that the UK was “managing” the slowdown in its car industry but had a “last chance” to boost the industry and jobs by switching to electric vehicles.

However, he warned that UK-based companies would need huge subsidy packages similar to those already announced by the US and currently being consulted upon by the EU.

Mr Palmer said it was “not only possible but likely” that current UK-based carmakers would pull out and look elsewhere if such plans were not implemented.

Industry is reacting to government's ZEV mandate.

“You are into a period of either you compete… or you manage the decline of the British industry down to fundamentally next to zero,” he said.

“We have the last throw of the dice in order to bring back some part of that industry, if we don’t then we have to look for alternative employments for the 820,000 people.”

The warning comes after the U.S. announced the Inflation Reduction Act, which provides billions of dollars in subsidies and taxes to U.S. companies that produce greener technologies, including electric vehicles, renewable electricity and sustainable jet fuel credit.

Budget: Fleet industry reacts to Chancellor's plans.

In response, the EU plans to introduce a net-zero industry law that would increase subsidies for green industries.

The UK government told BBC officials it was working with the US government to “address serious concerns about the Inflation Reduction Act” and was talking to other countries around the world that were “similarly affected”.

The government said it would “continue to robustly defend the interests of UK industry”.

The latest comments come after Mr Hunt said the UK would not go tit-for-tat with its allies and engage in what he called a “twisted global subsidy race”.

“Our approach will be different – and better,” Mr Hunt said. “With the threat of protectionism creeping its way back into the world economy, the long-term solution is not subsidy but security.”

As governments around the world seek to move away from the use of fossil fuels, the automotive industry is undergoing a dramatic upheaval, meaning traditional petrol and diesel internal combustion engines are said to be a thing of the past.

The government has announced it will ban the sale of new petrol and diesel cars in the UK by 2030 as part of a plan to reduce carbon emissions.

However, there are concerns that companies that are going mainstream with electric vehicles are not getting enough government support.

In recent years, Honda has closed its Swindon car manufacturing plant, losing around 3,500 jobs in the process. However, it is understood that BMW is preparing to invest up to 600 million pounds in its Mini plant in Cowley, Oxford, for the production of electric models, but has not yet announced a final decision.

BMW is negotiating a £75m grant with UK government.

The number of new cars built in Britain fell to the lowest level since 1956 in December, but car production in February was 13.1% higher than in the same month in 2022.

The Society of Motor Manufacturers and Traders said Britain had a “firm foundation” for expanding the production of electric vehicles, but warned “we must not squander these advantages”.

The government said it provided support through existing schemes.

It said Nissan and Envision investing £1bn to create an electric vehicle factory in Sunderland was an example of car manufacturers “choosing the UK thanks to our competitive investment environment”.

But Mr Palmer, who played a role in the launch of the Nissan Leaf car, said firms were “bound to look at where the biggest subsidies are coming from” while making investment decisions.

Nissan rushs into an electrified future with new lineup and technology.

“If you’re not prepared to compete, then you’ll have to start managing decline,” he said.

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UK car industry under threat without help.
Subscribe to Electric Vehicle News Bitesize Podcast for FREE to hear more!