The UK’s car industry is struggling to attract investment because of soaring energy costs, trade barriers and electric vehicle targets, according to the nation’s automotive lobby group.
Recent data from the Society of Motor Manufacturers and Traders (SMMT) shows that vehicle output in the first half of the year declined by 7.5 per cent.
In the first six months of the year, factories across the UK produced 385,979 new cars and commercial vehicles, down from 417,232 in the same timeframe last year.
While the SMMT acknowledged changes to production lines across the country over the last six months, it lamented the concerning future of the UK’s car industry.
Mike Hawes, chief executive of the SMMT, said regulations must reflect market conditions, especially when it comes to the sale of electric vehicles.
The Zero Emission Vehicle mandate states that manufacturers have a minimum percentage of sales come from EVs, with targets rising each year.
By the end of 2026, a 33 per cent target must be achieved, before moving to 80 per cent in 2030 and 100 per cent five years later, at which point, all new sales of petrol, diesel and hybrid vehicles will be prohibited.
The SMMT highlighted how manufacturers have spent billions of pounds on discounts to stimulate electric vehicle sales, although it warned that this may not be sustainable in the long term.
Experts have called for the ZEV mandate to be weakened to avoid losing investment in the UK auto sector
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Mr Hawes said: “The call for reform is not narrowly made: it comes from manufacturers that build and import here – both established and challenger brands – as well as from retail businesses, and those responsible for repairing vehicles.
“This is not about lowering ambition; it is about making the transition deliverable. The majority of our vehicles are exported, but attracting inward investment is all but impossible if the costs of the domestic market are unaffordable.”
Electric car sales have seen a marked improvement over the last year, with June seeing EVs capture 30 per cent of new car registrations and 63,950 new sales.
The market share of diesel vehicles has fallen below five per cent, while petrol has fallen from 48 per cent to 43 per cent.
Experts have taken aim at the Zero Emission Vehicle mandate
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NISSANManufacturers and some motoring organisations have called on the Government to lower electric car targets through the ZEV mandate, or the UK could face mass job losses and slumping investment.
Weeks before Sir Keir Starmer stepped down as Prime Minister, reports suggested that the Government was considering reducing the ZEV mandate target from 80 per cent in 2030 to 50 per cent.
New Business Secretary Jonathan Reynolds has hinted that rules could be watered down, with a review of the ZEV mandate still expected for the start of 2027.
Despite this, Gurjeet Grewal, CEO of Octopus Electric Vehicles, said the ZEV mandate was working, pointing to rising interest in electric cars and investment, from the likes of China’s Chery, in the UK.
China’s Chery has signed a Memorandum of Understanding with Nissan to use its Sunderland facility
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PAHe added: “Weakening the mandate now would send exactly the wrong signal to businesses looking to create jobs and invest here.
“EVs are no longer tomorrow’s technology – they’re increasingly the best-value cars on the road. The last thing the industry needs is another policy wobble that confuses consumers and puts investors off just as the transition is accelerating.”
Chery Commercial Vehicle confirmed earlier this year that it would be establishing its European headquarters in Liverpool, providing jobs across engineering, software development, R&D, and operations.
Similarly, Nissan has signed a Memorandum of Understanding with Chery to potentially develop passenger vehicles at the Japanese brand’s Sunderland facility.