£90m automotive cost increases lead to call for urgent action

UK automotive firms are facing a £90m increase in the cost of energy bills this year, new research from the SMMT has found.

With UK car and parts manufacturers at a competitive disadvantage with EU firms who are paying £50m less for energy, the industry has called for action on energy, skills and funding to drive large-scale investment beyond major firms and into SMEs across the UK.

A report, From Full Throttle to Full Charge, was unveiled at the SMMT International Automotive Summit 2022 today (Tuesday 28 June), which set out measures to help the industry to continue to grow towards a zero-emission powertrain world.

£4.9 billion was publicly committed to UK vehicle production during 2021, following the signing of the EU-UK Trade and Co-Operation Agreement (TCA). Most of the investment was made by major manufacturers though, ad the industry is looking to accelerate investment into SMEs up and down the supply chain. However, the surging cost of energy since the start of the war in Ukraine has complicated matters for the medium term.

Speaking today at the annual Summit, SMMT Chief Executive Mike Hawes said: “From Covid impacts to component shortages, supply chain disruption to trade uncertainty, and regulatory change to rising inflation, the challenges facing this sector are immense. Nevertheless, addressing the UK’s high energy costs is the industry’s number one ask.

“Help with energy costs now will help keep us competitive and be a windfall for the sector, stimulating investment in innovation, R&D, training – all reinvested in the UK economy. With the right backing this sector can drive the transition to net zero, supporting jobs and growth across the UK and exports across the globe.”

Looking at the transition to EVs for example, while engine and exhaust producers could seem to be threatened by electrification, the report suggests there are substantial prospects for those able to shift their focus to batteries, motors and power electronics

Mike continued: “Our plan, From Full Throttle to Full Charge, sets out how industry can work with government to build a UK automotive ecosystem fit for a zero-emission future. If there is the will, the effort and the action from government, they will find it matched by that of the UK industry in investment and competitiveness.”

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