British car industry heading for 'slow-motion crash'

Britian is on course to botch the shift away from the combustion engine and end up a car-making minnow.

This week, mostly UK-based electric-van startup Arrival announced its chief executive and president were stepping down. Last week, the boss of Britain’s biggest car manufacturer, Jaguar Land Rover, resigned after making little headway on an all-electric shift announced almost two years ago. 

And Britishvolt, the company thought to be the country’s best hope for a homegrown vehicle battery maker, is struggling to stay afloat.

It’s a bleak picture in stark contrast with the US, where car and battery manufacturers are being wooed with billions of dollars as President Joe Biden challenges China’s dominance of the global electric vehicle supply chain. 

That effort has gotten the attention of German Chancellor Olaf Scholz and French President Emmanuel Macron, who are hatching plans to promote and protect their car companies and suppliers.

British Prime Minister Rishi Sunak has less room to open up the wallet and support what’s left of the UK’s car manufacturing base. UK chancellor Jeremy Hunt last week unveiled a £55bn set of tax hikes and spending cuts that a free market think tank called a “recipe for managed decline". 

Included within that: A plan to start subjecting electric vehicle to road taxes in the coming years.

The UK’s austerity push adds insult to injury caused by Brexit, which plunged the country into a prolonged period of uncertainty and delayed automotive investment. During the 12 months leading up to the 2016 referendum, Britain churned out nearly 1.7 million cars. In the past year, carmakers have produced less than half that.

“We’re witnessing a slow-motion car crash of the UK auto industry,” said David Bailey, a business economics professor at the University of Birmingham. “Britain used to have an industrial strategy, but now the government seems to be standing on the sidelines,” he said. 

The UK’s struggle to modernise its car industry threatens thousands of industrial jobs as the transformation redraws the map of where cars are manufactured. 

BMW last month said it will move production of electric Mini hatchbacks from Oxford to China. Honda closed its car factory in Swindon last year, leaving Britain with just four mass manufacturers: JLR, Nissan, BMW and Toyota.

Even more worrisome is the UK’s lack of a substantive battery supply chain needed to support mass manufacturing of electric vehicles. 

Bloomberg