The British car industry has warned that it can't compete with rival nations on EV production unless the UK government provides urgent support.
The call made by the Society of Motor Manufacturers and Traders (SMMT) points to the impact of protectionist trade policies introduced by competing nations, such as the US’s $369 billion (£309bn) Inflation Reduction Act.
Introduced in August 2022, the Inflation Reduction Act offers manufacturers large subsidies for EVs built in the US: up to $7500 (£6250) for plug-in hybrid and electric cars in which the batteries pass minimum local content requirements through materials mined or at least refined in the US.
For commercial vehicles, this rises to $40,000 (£33,000). This prompted struggling EV start-up Arrival to shift its production focus from the UK to the US, taking advantage of the huge incentives on offer in a bid to save its business.
Large manufacturers are also reconsidering their plans in response to the Inflation Reduction Act, with plants reportedly at risk including Tesla’s Berlin gigafactory and Volkswagen’s planned plant in Eastern Europe.
Volkswagen is said to be weighing up a potential $10 billion (£8.3bn) in federal support if it chooses to build batteries in the US.
The European Union now threatens to heat up the competition with its own draft law – expected to be published tomorrow (14 March) – setting targets for localised battery production stimulated by an increase in financial support and a reduction in red tape.
Without its own supportive policies, the UK risks becoming unattractive to potential investors and manufacturers, the SMMT has argued.
The organisation has now set out a blueprint for the UK to become a leading location for EV manufacturing, with policies intended to stoke investment, reform regulations and increase global diplomacy.
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