The UK auto industry could disappear if the UK doesn’t join the US and EU in helping the transition to electric cars, an industry veteran has warned.
It is “likely” that car companies would leave the UK without a huge subsidy package similar to the billions in aid the US is providing, Andy Palmer said.
The sector is facing the “final roll of the dice,” said Mr Palmer, who has held senior positions at Nissan and Aston Martin.
The chancellor has said Britain will not see eye to eye with the US and EU.
Jeremy Hunt told the Times newspaper that the UK’s approach to attracting investment is “better”.
Mr. Palmer is now chairman of electric battery company Inno-bat, but previously worked as chief operating officer at Nissan, the former chief executive of Aston Martin.
He told the BBC’s Today program that Britain is “managing” the slowdown in its car industry but has a “last chance” to boost the sector and jobs as it transitions to electric vehicles.
However, he warned that UK-based companies would need huge subsidy packages, similar to such schemes announced in the US and currently being consulted by the EU>
If such systems are not put in place, Mr Palmer said it was “not only possible but likely” that the current UK-based automakers would exit and go elsewhere.
“You’re in a phase where you’re either competing… or you’re managing the decline of British industry to virtually nothing,” he said.
“We have the last shot to bring back part of this industry, if we don’t do that we will have to look for alternative employment for the 820,000 people.”
The warning comes after the US announced the Inflation Reduction Act (IRA), which offers billions of dollars in subsidies and tax credits to US companies that produce greener technologies, including electric vehicles, renewable electricity and sustainable jet fuel.
The EU has responded with plans for a net-zero industry law to increase its subsidies for green industry.
Mr Hunt said Britain would not go toe-to-toe with its allies and engage in what he called “a distorting global subsidies race”.
“Our approach will be different – and better,” said Hunt.
The number of new cars manufactured in Britain fell to its lowest level in 66 years in January, with firms warning the country is not doing enough to attract manufacturers and is lagging behind, particularly in providing state aid to businesses.
According to figures from the Society of Motor Manufacturers, the 10% drop was the worst performance since 1956.
The US move already has vocal critics in the UK government, with Business and Trade Secretary Kemi Badenoch calling it “protectionist” and Energy Secretary Grant Shapps saying it is “dangerous”.
Some fear it gives the US an unfair competitive advantage and that it is an attempt to attract high-tech manufacturing companies to the US.
“With the threat of protectionism creeping back into the global economy, the long-term solution is not subsidies, it’s safety,” Hunt said.
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