UK car production experienced a sharp decline in October, with overall output dropping by more than 15% compared to the same period last year.
The Society of Motor Manufacturers and Traders (SMMT) attributed this downturn mainly to weaker export demand, contributing to a slowdown in electric vehicle (EV) production.
Production of electric and hybrid vehicles fell by a significant third, with factors including reduced demand in Europe and factory retooling for upcoming models playing a key role.
The news comes as Vauxhall maker Stellantis announced the closure of its Luton van factory, partly in response to regulations aimed at accelerating the transition to electric vehicles in the UK.
Further adding to the pressure, Ford revealed last week that it would cut 800 jobs in the UK over the next three years, citing challenging trading conditions, fierce competition, and lower-than-expected demand for EVs.
Mike Hawes, SMMT’s Chief Executive, expressed concerns about the industry’s future, stating: “These are deeply concerning times for the automotive industry, with massive investments in plants and new zero emission products under intense pressure.”
While the global demand for EVs has been weakening, the UK’s automotive manufacturers are facing additional challenges.
Hawes pointed out that UK manufacturers are up against the “toughest targets and most accelerated timeline,” without sufficient incentives to stimulate consumer demand for electric vehicles.
Electric Vehicle Sales on the Rise Despite Production Setbacks
Despite the drop in EV production, sales of electric vehicles in the UK have been increasing. In October, EVs accounted for one in every five cars registered, although this surge has largely been driven by unsustainable discounting strategies, industry insiders claim.
There has been growing tension between the UK government and the automotive sector over the planned phase-out of petrol and diesel cars by 2030.
Under the UK’s Zero Emission Vehicle (ZEV) mandate, manufacturers are required to ensure a certain percentage of their sales consist of zero-emission vehicles before the 2030 deadline.
In 2024, carmakers must achieve 22% of their sales from electric vehicles, with van sales reaching 10%. Failure to meet these targets will result in hefty penalties of £15,000 per car, though companies can purchase credits from those meeting their quotas.
Business Secretary Jonathan Reynolds has confirmed that a “fast track” consultation will address how the ZEV targets will be enforced, while reiterating Labour’s commitment to the 2030 phase-out.
The UK government has pledged £2 billion towards car manufacturing and over £300 million to support the uptake of electric vehicles.
A spokesperson for the Department for Business and Trade emphasised the government’s commitment to providing certainty and stability for the sector while working closely with industry leaders to ensure a smooth transition.
However, the looming closure of Stellantis’ Luton plant, which will put 1,100 jobs at risk, signals the growing pressure facing the industry.
Former UK manufacturing lead for Stellantis, Mark Noble, expressed disappointment at the plant’s closure, attributing part of the decision to ongoing uncertainties surrounding Brexit tariffs and the ZEV mandate.
Noble highlighted that both Luton and Ellesmere Port plants, which export more than 80% of their production, have suffered from Brexit-related tariff confusion and lack of clarity, negatively affecting production.
He also called for clarity on the ZEV mandate, arguing that carmakers need a clearer path to meet these green targets without being burdened by financial penalties. “The government must decide: is this a tax, or is it their mandate to support the green transition?” he said.
Vicky Read, Chief Executive of Charge UK, the industry body for EV charging, stressed the importance of private sector funding for expanding charging infrastructure.
Despite the growing concerns within the industry, she reassured that a new charger is being installed every 25 minutes, with over 71,000 public charging points now available in the UK.
However, James Richardson, Director of Analysis for the Climate Change Committee, warned that traditional car manufacturers are at risk of being surpassed by newer, more agile competitors in the EV space.
“Electric sales targets are crucial for sending a message to companies to act swiftly, or risk being left behind as the market shifts,” he said.
