We should hold fast on electric vehicle targets because they’re working  – Inside track

This post is by Ben Nelmes at New Automotive, the independent transport research organisation.

Judging by some newspaper headlines, you would be forgiven for thinking that the UK’s transition to electric cars is stuck in the mud. The reality is that it is pulling into the fast lane. 

New data published today by New AutoMotive shows one in four new cars in November was fully electric, the fourth month in a row that electric car registrations have been above 20 per cent. But, as European carmakers face a deepening crisis, calls are growing for policy makers to take their foot off the accelerator and slow down progress towards the inevitable all-electric future. 

The crisis in the European automotive industry began when Chinese motorists discovered and fell in love with new Chinese car brands. Small, reliable and affordable cars, which can be produced using the kind of modularised manufacturing processes at which China has always excelled, now dominate in what used to be a key export market for European and other legacy carmakers. With encouragement from the Chinese government, these new brands are embracing electrification with creativity and an innovative approach that stands in stark contrast to the incumbents. 

Some company decisions don’t make sense
As well as loss of market share to new challengers, some boardroom decisions on electric vehicles (EVs) have seemed incomprehensible. Spooked by Tesla’s remarkable growth, many legacy carmakers attempted to follow in the footsteps of Elon Musk. But they found that Chinese brands were busy developing electric versions of the affordable mass market car preferred by the vast majority of European motorists. Once a leader in electrification, Nissan recently abandoned one of the most popular and increasingly affordable EVs, the Sunderland-made Leaf, replacing it with the significantly bigger Ariya, adding over £10,000 to the sticker price in the process. It has not sold well. 

Then there was the decision by Fiat, part of the Stellantis group, to develop an electric version of its popular 500 model. But those wishing to make the switch were faced with a £10,000 premium on the electric model, despite it containing an estimated £2,500 worth of batteries, according to Bloomberg. This attempt to recoup capital investments in EV manufacturing so quickly and over so few vehicle sales makes little sense if one assumes the business is committed to the product’s success. 

It is said that, in times of crisis, leaders emerge not by their words but by their deeds. In the week after Stellantis decided to shutter its 120 year-old Vauxhall factory in Luton, the abrupt departure of the company’s outspoken CEO is telling. In this vacuum of leadership, it is more important than ever before that policy makers ensure the UK has the right circumstances to reward investment in the clean technologies and products that will dominate in future. Ministers should, therefore, approach a forthcoming consultation on the UK’s EV targets with extreme caution. 

Carmakers getting ahead are seeing the rewards
Discussion of these often misunderstood targets tends to focus on potential fines – even though carmakers will sell enough EVs this year to avoid them – and includes little recognition that the scheme provides handsome rewards to those carmakers who are investing in UK EV manufacturing. For example, BMW’s decision to spend £600 million making Cowley a major centre for electric Mini manufacturing now means the company stands to benefit financially from the UK’s EV targets. 

The targets are also vital to £6 billion of investment in charging infrastructure. If ministers ‘tweak’ or extend flexibilities in that scheme, they will inevitably undermine the rewards that are due to carmakers forging success in a 21st century car market. And it will mean fewer EVs on the roads, thereby pulling the rug from under the business case for installing new charge points. Headlines in six months’ time decrying a slow down in the installation rate of new charge points is not what any transport secretary wants to see. Especially when you consider that when this government seeks re-election there will be approximately five million electric car drivers whose votes will be needed. 

These decisions are not easy. Anyone who grew up in one of Britain’s car manufacturing places, and experienced the devastation that closures and mass job losses visit on communities, will understand the gravity of the situation. But, ultimately, there are two ways to respond to the challenges faced by the automotive industry. One is to try to prop up old jobs, skills and technologies that are on their way out. Previous Labour governments have tried that approach and did not last long. Or ministers can accept what they cannot change, and focus on ensuring that Britain is equipped to rise to the challenge of the new technologies and industries of the 21st century. Maintaining our EV ambitions would be a good first step.