In stark contrast to the Government’s pushing back of the deadline for the switch to electric vehicles, the car industry has been using the summer holiday period to move more manufacturing space across to producing battery powered cars. Overall car production in August 2023 was down almost 10%, while vehicles with some type of electric propulsion continue to grow – up by almost 3%.
As the on-going high levels of interest rates from UK banks continues to bite into the economy’s spending power, domestic sales fell by just over 25% in August. That said, the cumulative numbers for 2023 are certainly stronger than for the same eight month period in 2023 – up almost 12% year on year. While the balance between pure EV and hybrid vehicles changes periodically, the overall picture is that at least 2 out of 5 cars continue to have an electric propulsion motor at their core.
The Society for Motor Manufacturers and Traders (SMMT) believes that this summertime drop is not a cause for alarm. CEO Mike Hawes told media, “After six straight months of growth, a decline in UK… is not a cause for concern. With car manufacturers taking advantage of the summer holiday season to upgrade their plants, this is part of an ongoing commitment to deliver the next generation of electric vehicles, with a record number of these models already being made”.
Hawes is concerned that the UK Government communicates a strong and clear plan for the transition to a carbon neutral economy – specifically when it comes to transportation.
“To secure future investment, however, we need business certainty, not least a UK-EU agreement to delay tougher rules of origin that would damage the competitiveness of electric vehicles in both the European and British markets and concrete details from the UK government on the regulation compelling the sale of EVs in Britain. Both are due to commence in less than 100 days and are essential to business planning and investment for 2024 and beyond”, said Hawes.
On the subject of communicating strong plans in order to encourage growth, in Germany energy giant E-On has been laying out its plans for a successful transition to tomorrow’s economy. Specifically, they have ‘5 Impulses’ that they believe need to be achieved for the changes that will come, namely:-
- Multi-Faceted Approach
Putting a ‘magic triangle’ at the heart of tomorrow’s plans – so that Governments are focused on (a) affordability, (b) security of supply and (c) environmental/climate compatibility by 2045 at the latest - Resilient systems
Creation of a system that minimises the effects of crisis and external geopolitical disruptions – which will rely on diversification in areas like the technologies being used and the procurement of raw materials – as well as built-in adaptability to future changes. Limiting/reducing the use of fossil fuels will be central to this point - Improved Energy Markets
Government support and encouragement for the energy only market (not tied to a particular raw material), to incentivise efficient/flexible production – so that supplies are economically fair and regionally reasonable - Connected Industry and Government
Creating close connections between Government and the large energy players – so that the movement to a climate neutral economy is the key goal of every major stakeholder. The state must ensure funding and provide clear direction to keep momentum going and to avoid confusion. Energy security for future generations must be front and centre of any decisions made - Agreement on Goals and Methods
Consensus between all of the major political parties is essential. No matter which party is in office, they need to be committed (in the broadest sense) to the implementation of this contract – without the need for destructive rhetorical crossfire
Car sales, production, the fuel being used and how much drivers have to pay for the energy needed for transportation – are of key importance as the UK moves toward the energy world of tomorrow. Stability and smooth transition would appear to be good for everyone concerned.
The SMMT's position on the recent uncertainty is clear. It says that manufacturers will continue to put innovative new models on the market but consumers need encouragement to buy more than ever. Sunak's recent announcement must be backed up with a package of attractive incentives and measures to accelerate charging infrastructure to give consumers the confidence to switch. Carrots move markets faster than sticks.
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