Rising production of electric vehicles puts shine on falling UK car manufacturing

Fri 27 Jan 2023
Posted by: Phillip Adnett
Trade News

Car production line

UK car production last year fell to its lowest since 1956 as output was hit by global shortages of semiconductor chips.

Figures from the Society of Motor Manufacturers and Traders (SMMT) said 775,014 cars were built in Britain in 2022, down 9.8% on the previous year.

Overall output for 2022 was down 17.9% year-on-year, following growth in October and November, reports City AM.

Electric vehicles boost

There was some good news on production levels of electrified vehicles, with almost a third of all cars made fully electric or hybrid, according to the SMMT.

Electric vehicles were worth £10bn in exports alone, but overall international sales were down 14%.

Despite being down 10%, the EU remained the sector’s largest market with 57.6% of exports heading into the bloc.

Market numbers

Exports to the US and China also fell, down -31.6% and -8.3% respectively.

The number of cars sent to Japan (+5.7%), South Korea (+32.8%), Australia (+4.7%), Switzerland (+2.7%) and South Africa (+23.0%) all increased. 

Exports to Russia, a top 10 export market in 2021, meanwhile, fell by 78.3%.

SMMT chief executive, Mike Hawes, called for “a strategy to drive rapid upscaling of UK battery production and the shift to electric vehicles based on the UK automotive sector’s fundamental strengths”.

Subsidy war

Electric vehicle production is facing a showdown between the US and EU, as Europe has started drawing up proposals for a multibillion-euro fund to compete with the US’s $369bn package of state subsidies for green energy companies and electric carmakers.

Brussels is concerned that investment will end up in the US unless it responds.

Britain is also concerned the spat could damage investment in British industries such as electric vehicle production, reports the Times.

A draft communiqué being prepared before an EU leaders’ summit next month proposes an EU fund worth about €300bn – or 2% of EU economic output – to provide cheap loans to subsidise domestic green technology companies.

Alongside the fund would be a relaxation of single-market rules on subsidies.

However, the idea faces opposition from fiscal conservatives such as Dutch PM Mark Rutte, reports the FT.

Britain’s position

According to the BBC, both the business and trade secretaries have raised concerns with their US counterparts, but their precise demands are unclear.

Business secretary Grant Shapps says the UK doesn’t need a US-style package of green incentives, because the UK is already “ahead of the game” by investing in renewable energy sources such as windfarms.

Shapps also told the BBC he is confident the UK won’t be overlooked in any EU-US carve-up on this issue.