Spare a thought for the poor car industry. As a sector it has had a lot to deal with over the last few years. There have been well-publicised scandals on emissions, increased robust regulatory and legislative approaches by governments to reducing emissions, uncertainty caused by Brexit and the general economic impact of COVID, which has made consumers reluctant to make major purchases.
All of this has combined to make a challenging environment for car-makers to operate in. This has impacted on their bottom line, with sales of new cars in 2020 falling by 29%, hitting their lowest level since 1992.
Within all of this however, there is one area of automotive which is bucking the downward trends and continues to grow year on year.
That of course is the seemingly unstoppable rise of electric vehicles. Even in a falling market, over the past year sales of battery powered cars almost trebled to just under 110,000.
This is a trend which we will almost certainly see continuing. In only a few years, electric vehicles have gone from a marginal curiosity to mainstream acceptance, with an increasing recognition from manufacturers and consumers that the future is electric.
Electric Vehicles – the Push and Pull Factors
There are two things going on at the same time – a push and a pull factor. The push is away from combustion. Despite the increased efficiency of modern engines, diesel and petrol engines are a major contributor to air pollution, and impact on both health and the environment.
Last year, the UK became the first nation to announce a ban on the sale of new petrol and diesel cars from 2030. That is less than 10 years away. Given that consumers see purchasing a car as a long-term investment, and factor in issues such as resale value further down the line, that announcement is already starting to impact on behaviour now. This is a key part of the wider government commitment to achieve carbon neutrality by 2050. We know that transport use contributes a fifth of all UK greenhouse gas emissions. The government’s view is that revolutionising the way that the nation transports itself will radically cut that number.
That is the push. The pull is that electric cars are becoming a more attractive option for consumers. There are lots of reasons for this. Battery technology has improved massively in a short space of time, providing reliability and the confidence to undertake longer journeys. The infrastructure is slowly improving with more charging points up and down the country – meaning that today, on motorways and A roads, a driver is never more than 25 miles away from a rapid chargepoint. And manufacturers are now investing heavily in producing and marketing electric vehicles. It is certainly the case that anyone buying a new car today will have electric options to choose from that simply were not there even 2 or 3 years ago.
A New Political Consensus
And electric cars are not just good for the planet. Politicians on all sides are waking up to the fact that they just might provide a positive jolt to the UK economy too. We are now seeing the major political parties striving to outdo one another in the level of support they are committing to this burgeoning sector.
Boris Johnson has already promised a “green industrial revolution” to bring new jobs to former “Red Wall” industrial areas that turned blue in the 2020 General Election. Similarly, Transport Secretary Grant Shapps, recently announced £20m to help fund new charging points, as the government works towards its target of ending the sale of new petrol and diesel cars and vans by 2030.
In recent weeks, we have seen the Labour Party response, with the announcement of a set of bold proposals designed to support the industry and stoke consumer demand. Ed Miliband, the Shadow Business Secretary has suggested that these proposals would “spark an electric vehicle revolution in every part of the country”.
The Labour proposals suggest part financing three new, additional gigafactories by 2025, offering interest free loans to consumers on low and middle incomes to incentivise and expand take up, and further strengthening the infrastructure that the electric revolution requires – with more charging points up and down the country.
What is clear is that whilst tactics may vary between political parties, there is generally a consensus about the strategy – and an apparent agreement that by moving early, the UK could secure a strong global position when it comes to electric vehicle manufacturing. From a manufacturing point of view, this should be good news, because it provides that essential ingredient that businesses always need to invest – stability.
In fact, we are already seeing major investment in the sector – with Britishvolt recently announcing a £2.6bn investment to build a Gigafactory in Blythe, Northumberland. Construction is due to begin later in 2021 and, when operational, the factory will produce over 300,000 lithium-ion batteries for the UK automotive industry, directly supporting 3000 jobs with 5000 more in the wider supply chain. There is also a proposal for a £2bn Gigafactory in Coventry currently going through the planning process.
Businesses are already stepping up. If the UK Government, whatever its complexion, truly commits to and supports this technology then it could help to create an operating environment which makes the UK a world-leader in the development and application of these new technologies.
The knock-on consequences of this across wider UK manufacturing technology could be significant. Take a company such as ENL. We don’t make cars, and we don’t make batteries. But what we do make is the housing that seats the battery in the car using cutting edge plastic injection moulding technology (which we wrote about here). This is simply one example – there will be many others – of how a new technology generates value across supply chains, not simply within one part of it.
As we see with the increased sales of electric vehicles, this is not just the technology of tomorrow, it is also the technology of today. With business investment, and government support, the next decade could well turn out to be a new boom time for the UK automotive industry.
ENL Group is based in Portsmouth, UK. Established in 1958, we have been supplying to the automotive industry for decades. Trusted to deliver quality parts for leading brands such as Jaguar, Volkswagen, Mercedes, Aston Martin, and many more. Working with a secure supply chain, ENL provides quality components for quality-driven customers. Operating 24/7, we design, manufacture and deliver critical components for our customers across the UK and Europe.