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    Automotive & Motorsport

    Enhance our competitiveness to attract auto investment

    • By MTDCNC
    • March 23, 2021
    • 4 minute read

    The automotive sector has a bright future but supply chains for electrification and government support for advanced manufacturing are key, says Mike Hawes, CEO of the Society of Motor Manufacturers and Traders

    1. SMMT advocated the UK remaining in the EU and was a strong voice to avoid a No Deal Brexit. What are the main positives for automotive from the deal Britain has secured with the EU?

    The Trade and Co-operation Agreement with the EU was a huge relief to the automotive industry, which was facing a significant tariff risk from a ‘no deal’ outcome. The deal provides the opportunity for tariff and quota-free trade, foundations on which the industry can build and secure several positive outcomes, such as the inclusion of specific, albeit challenging, provisions on transitional phase-ins for both electrified vehicles and batteries. This was a welcome sign that our importance as a sector is understood at the top levels of government.

    2. Composition of UK automotive: If you divide automotive manufacturing into categories like cars (IEC engine), vans, HGVs, buses, and electric and alternate fuel vehicles – how has the pie chart changed in the last 3 years? 

    The new car market is undergoing a rapid shift to electrification. 2020 was a bumper year for battery and plug-in hybrids, in particular, which together accounted for more than one in 10 registrations – up from around one in 30 in 2019. In 2021, these vehicles are forecast to grow their combined market share to more than one in seven, equivalent to some 275,000 registrations, so the direction of travel is clear. 

    With light commercial vehicles, while they are still predominantly diesel-powered, there are an increasing number of alternatively fuelled models coming to market, in particular plug-in hybrid and pure electric variants. However, achieving zero tailpipe emissions in the heavy vehicle sector remains a challenge that will require a specialised approach that is different from cars and vans.

    3. Brexit and Covid-19 have had a challenging impact on industry. Looking forward, what positive news is there for companies in the UK supply chain for both IC and EV’s?

    Despite tough market conditions at the start of 2021, there is hope for the future. UK automotive is fundamentally strong, built on firm foundations with a long history of being globally competitive thanks to significant overseas investment into the sector. We have a flexible, productive and dedicated workforce, contribute billions to the economy and provide highly paid jobs in all regions of the UK. So long as we can sustain and enhance our global competitiveness, we can continue to attract investment.

    Investment that is built around sustainability – with electrified and hydrogen models, as well as connected and digital technologies – matching government ambitions and increasing consumer expectations, will be a key step towards future industry success to secure jobs and livelihoods.

    4. Reshoring: many car components come from overseas. Which commodity areas could see more reshoring from Eastern Europe, Asia and other countries to the UK? What new component opportunities do your ‘Meet the Buyer’ events reveal?

    Growing our own battery production is crucial, and batteries would clearly be the most in demand commodity for vehicle manufacturers looking to produce in the UK. The underlying supply chains associated with each step in the process, from raw material processing to battery cell modules are also of interest, as are producing power electronics, motors and the EV powertrain architecture. While growing this capability will be challenging, as these are relatively new supply chains in the UK, there are also more potential opportunities particularly for those moving first.

    5. JLR is committing to keeping all British plants open and all its models to be electric by 2030: will other automotive manufacturers follow? What progress do you see among the UK car majors (Nissan, Toyota, BMW) in going fully electric?

    All major vehicle manufacturers have electrification plans in place and there are some 100 electrified models on sale in the UK, with many more to come. We already make world-class electric cars and taxis in the UK and have done for years, so recent long-term commitments by major automotive manufacturers to continue producing electrified products in the UK are very welcome. It provides an injection of confidence in the wider sector.

    To keep up the momentum is not just the responsibility of the automotive sector and it will require the UK to improve its competitiveness, as global competition is fierce. The government must ensure advanced manufacturing has its full support, with a policy framework and plan for growth that reduces costs, accelerates domestic battery production and electrified supply chains. It must also incentivise R&D and skills development. Every effort must be made to create conditions that will enable the entire sector to flourish.

    https://cdn.mtdcnc.global/cnc/wp-content/uploads/2021/03/23173728/P90412990_highRes_engine-assembly-prod-640x360.jpg

    Enhance our competitiveness to attract auto investment

    The automotive sector has a bright future but supply chains for electrification and government support for advanced manufacturing are key, says Mike Hawes, CEO of the Society of Motor Manufacturers and Traders

    1. SMMT advocated the UK remaining in the EU and was a strong voice to avoid a No Deal Brexit. What are the main positives for automotive from the deal Britain has secured with the EU?

    The Trade and Co-operation Agreement with the EU was a huge relief to the automotive industry, which was facing a significant tariff risk from a ‘no deal’ outcome. The deal provides the opportunity for tariff and quota-free trade, foundations on which the industry can build and secure several positive outcomes, such as the inclusion of specific, albeit challenging, provisions on transitional phase-ins for both electrified vehicles and batteries. This was a welcome sign that our importance as a sector is understood at the top levels of government.

    2. Composition of UK automotive: If you divide automotive manufacturing into categories like cars (IEC engine), vans, HGVs, buses, and electric and alternate fuel vehicles – how has the pie chart changed in the last 3 years? 

    The new car market is undergoing a rapid shift to electrification. 2020 was a bumper year for battery and plug-in hybrids, in particular, which together accounted for more than one in 10 registrations – up from around one in 30 in 2019. In 2021, these vehicles are forecast to grow their combined market share to more than one in seven, equivalent to some 275,000 registrations, so the direction of travel is clear. 

    With light commercial vehicles, while they are still predominantly diesel-powered, there are an increasing number of alternatively fuelled models coming to market, in particular plug-in hybrid and pure electric variants. However, achieving zero tailpipe emissions in the heavy vehicle sector remains a challenge that will require a specialised approach that is different from cars and vans.

    3. Brexit and Covid-19 have had a challenging impact on industry. Looking forward, what positive news is there for companies in the UK supply chain for both IC and EV’s?

    Despite tough market conditions at the start of 2021, there is hope for the future. UK automotive is fundamentally strong, built on firm foundations with a long history of being globally competitive thanks to significant overseas investment into the sector. We have a flexible, productive and dedicated workforce, contribute billions to the economy and provide highly paid jobs in all regions of the UK. So long as we can sustain and enhance our global competitiveness, we can continue to attract investment.

    Investment that is built around sustainability – with electrified and hydrogen models, as well as connected and digital technologies – matching government ambitions and increasing consumer expectations, will be a key step towards future industry success to secure jobs and livelihoods.

    4. Reshoring: many car components come from overseas. Which commodity areas could see more reshoring from Eastern Europe, Asia and other countries to the UK? What new component opportunities do your ‘Meet the Buyer’ events reveal?

    Growing our own battery production is crucial, and batteries would clearly be the most in demand commodity for vehicle manufacturers looking to produce in the UK. The underlying supply chains associated with each step in the process, from raw material processing to battery cell modules are also of interest, as are producing power electronics, motors and the EV powertrain architecture. While growing this capability will be challenging, as these are relatively new supply chains in the UK, there are also more potential opportunities particularly for those moving first.

    5. JLR is committing to keeping all British plants open and all its models to be electric by 2030: will other automotive manufacturers follow? What progress do you see among the UK car majors (Nissan, Toyota, BMW) in going fully electric?

    All major vehicle manufacturers have electrification plans in place and there are some 100 electrified models on sale in the UK, with many more to come. We already make world-class electric cars and taxis in the UK and have done for years, so recent long-term commitments by major automotive manufacturers to continue producing electrified products in the UK are very welcome. It provides an injection of confidence in the wider sector.

    To keep up the momentum is not just the responsibility of the automotive sector and it will require the UK to improve its competitiveness, as global competition is fierce. The government must ensure advanced manufacturing has its full support, with a policy framework and plan for growth that reduces costs, accelerates domestic battery production and electrified supply chains. It must also incentivise R&D and skills development. Every effort must be made to create conditions that will enable the entire sector to flourish.