Who killed the car industry?

The UK car industry is in trouble. Britishvolt, the UK’s venture into electric car batteries, collapsed in January and made more than 200 workers redundant. Meanwhile, Ford announced last week that it will cut 1,300 jobs. Later this year, BMW is set to start making electric Minis – not at its plant in Cowley, Oxford, but at Jiangsu, China. These are only the latest setbacks. In 2019, Honda said it would quit Swindon. In 2020, Ford closed its engine factory at Bridgend in Wales.

Overall, Britain made just 775,000 cars in 2022, compared with 1.3million in 2019, before the Covid pandemic. Annual output is now at its worst since 1956.

So who or what is killing the car industry? For the Society of Motor Manufacturers and Traders (SMMT), the problems within the car industry are mainly down to the global shortage of semiconductors. Others warn that Britain risks being ‘caught in the crossfire’ of a car-production subsidy war – President Biden is preparing to featherbed car-assembly lines in the US and the EU is readying similar measures in response.

No doubt these are both important headwinds for UK carmakers. However, one factor that is often overlooked is the British state’s war on the car – a war that has intensified in recent years.

Under Net Zero plans, petrol and diesel cars are meant to be phased out in 2030, with hybrids for the chop in 2035. Already motorists are facing the expansion of the Ultra Low Emission Zone (ULEZ) in London and the multiplication of Low Traffic Neighbourhoods (LTNs) nationwide. CCTV systems, mostly made by China’s Hikvision and Dahua, have also sprouted up to enforce these schemes. Meanwhile, the Labour government in Wales is set to impose a 20mph speed limit in residential and built-up areas in September. The Welsh government has even scrapped all major road-building projects.

Altogether, driving is getting much tougher in the UK. Just as it is becoming more expensive to take your car for a drive, the quality of roads is deteriorating.

So can electric cars save the car industry? Of course, the SMMT is delighted that production of electric and hybrid vehicles is reaching new highs. Last year, output came close to 250,000 units, with electric vehicles (EVs) taking almost half the value of British car exports. But we shouldn’t get our hopes up. These positive trends cannot disguise the fact that doubts about electric cars are growing.

One of the primary concerns about electric cars is how expensive they are. They may not be expensive forever, and companies like Tesla and Ford have been slashing prices lately. But only a very few new EV models cost under £30,000. South Korea’s Kia, whose sales are booming in the UK, has said that the expense of batteries will rule out small, cheap electric cars for years to come. Plus, the current tax incentives for buying EVs will be lowered over time.

Operating EVs isn’t cheap either, thanks to the soaring cost of electricity. Nor is charging especially easy. The abysmal number of charging points in the UK, many of which are broken and slow to charge, is a barrier to take-up.

Besides, if drivers do want to buy electric in future, they won’t just entertain British models, but also Chinese brands such as BYD (launching in the UK this year) or Chery (launching in 2024).

What’s more, the supposed environmental gains are not all they seem – and the media are starting to notice. Some motorists will have read about the substantial CO2 emissions involved in the production of electric cars and batteries. Not to mention the fact that, for years to come, electric cars will mostly be powered by gas-fired electricity.

Perhaps most significant is that the war on the car affects electric cars, too. With no serious road-building happening across the UK, congestion is growing.

What this means is that Britain’s car-industry crisis is not just down to high prices and supply-chain problems. It is down to the state’s attempts to restrict mobility of every sort. Of course, that begins with the clampdown on petrol cars – but there will be no switch to electric cars, walking, cycling or public transport to compensate for this loss of mobility. Last year’s demand for new buses, for instance, was the weakest since records began.

The future looks bleak for the UK automotive sector – including for electric vehicles. The state’s green war on the car is having a tragic effect.

James Woudhuysen is visiting professor of forecasting and innovation at London South Bank University.