Following other countries' lead and giving vehicle manufacturers with UK production plants a financial helping hand to make their EVs affordable to more drivers makes sense, argues AM's regular columnist Professor Jim Saker, emeritus professor of Loughborough University's business school and president of the Institute of the Motor Industry. But he's not holding his breath waiting for it to happen.
I sat in an upmarket Land Rover dealership in Hatfield waiting for Daksh Gupta to drop off his car so that we could go for lunch. Because AM is now fully online the only motoring magazine lying around was the July Edition of BusinessF1.
As I thumbed through the pages it wasn’t the picture of Carlos Tavares talking about the Chinese threat to European Car makers that struck me it - was a picture of Joe Biden at the bottom of the page heading a small article entitled ‘America’s backdoor rejection of Chinese electric cars.’
The sentence in the article that really hit me was ‘The US Government is giving American indigenous manufacturers a $7,500 subsidy on every electric car sold which, if passed on to customers, will virtually obliterate the Chinese $10,000 price advantage.’
At first glance incentives such as these have been tried in the UK. That is not the point.
The significant word in the sentence is ‘indigenous’ - basically he is backing companies that manufacture in the US. He isn’t giving an incentive for people to buy from foreign organisations who don’t.
Over lunch Daksh and I discussed the ZEV Mandate and the 2024 22% target for BEVs by brand and companies who would be facing the potential £15k penalty per unit. As we went through them the word ‘indigenous’ came back and hit me.
Names like Ford, Toyota, JLR and even to a lesser extent Vauxhall and Nissan look to be facing the biggest challenge. They are going to have to somehow sell more electric cars, sell less ICE vehicles (including hybrids), or buy/borrow credits from Tesla or the Chinese brands to get to the 22% level.
The option of buying credits means that the equivalent of the penalty payment will go to improve the commercial position of Tesla and the Chinese brands so that even the British taxpayer doesn’t benefit.
The Government grant for a gigafactory in Somerset for JLR coupled with the £300 million to help decarbonise the steel works in South Wales seems like a small step in the right direction. Unfortunately, as we don’t have the critical minerals in this country and due to the Brexit tariff barriers, there is a question over the economic viability of anything produced at that facility.
Biden is trying to build a self sufficient ‘fortress America’. I fully appreciate that this might be an impossibility for the UK but what I don’t understand is why the Government appears to be targeting those companies who manufacture cars in the UK and employ and develop the high-tech engineering workforce of the future.
These companies have invested in the UK over many years, so why do we not support ‘indigenous’ manufacturers in the same way as in the US?
One thing is for certain: when it comes to 2035 the German, French and Italian Governments will not be allowing imported vehicles to swamp their markets while at the same time having rules that penalise their ‘indigenous’ manufacturers.
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