Any meaningful change in the shipping volumes of Electric Vehicles in the UK is going to have a huge impact on workers in the car industry who are based here. Some figures, from the SMMT (a car industry lobbying group, presently focused on telling us all that diesel is fine (i.e. government has orchestrated a scare campaign about its nasty effects), that Brexit will be a disaster and that we should, of course, be buying more cars):
They publish a handy booklet that contains more information. Some of the numbers are different, eg. the picture above (which is in the booklet) claims 856,000 workers, the table below that picture in the same booklet says 823,000 (my sense is there is both 2017 and 2018 data mixed up throughout).
There are a couple of numbers that I suspect are more important than the others.
1. 2,722,325 engines built (in 2017)
2. 1,334,538 cars exported (out of 1,671,166 built and 2,540,617 registered)
That is, we build engines for a lot of cars that are not made in the UK. And we export about 80% of the cars that we build; and we import pretty much as many as we export.
Plainly, as we, and the rest of Europe (and the world) switch to EVs, that number of engines built is going to fall, probably quite dramatically. There are many countries with far more aggressive targets for EVs than our own, of course, and they will stop buying engines far more quickly than we in the UK. Maybe 50% of those engines are diesel (the overall number of diesel cars purchased has fallen in the last 2-3 years, perhaps by as much as 40% but some car makers, Land Rover, for instance, are still heavily dependent on diesel) – and those will therefore stop being built far faster. The recent introduction of the WLTP test has done little to help the car industry.
If you play in
– the increasing trend of teenagers and young adults to skip driving lessons and the ritual of trying to pass your driving test (in an urban centric model of better public transport, Uber and other things to spend money on, why would a car be high up the list of wasting assets to purchase?)
– the use of PCPs as a profit centre (I’m told that the entire profit on a new car comes in the arbitrage between interest rates as car companies increasingly finance their own sales) which is going to hurt as the second hand value of diesels falls precipitously (first) and then, later, as petrol cars go the same way (whether replaced by hybrids or pure EVs)
Car purchases are likely to continue to fall, even before we get into the potential for “connected and autonomous vehicles” as the SMMT refers to them (they don’t mention EVs in the booklet). They will bottom, of course, but it doesn’t feel like they bottom with the same number of employees as we have today.
Similarly, if other countries are buying increasing numbers of EVs, they’re not making the cars that we are building today. This is why car companies are trying to outdo each other by striking partnerships, link ups, buying each other and investing ever increasing numbers of billions in EV capability.
There’s also some worrying data presented. The picture below, notwithstanding that the headline suggests CO2 emissions were 8.3% lower in 2018 for new cars, also says that emissions for newly registered cars rose 2.9%. Confused? I am. Mort importantly, the EU target for just 2-3 years away is more than 30% below current emissions levels (and the chary handily says that we have reduced emissions by about that much since 2000, i.e. in 18 years. As I’ve written here before, if the car companies don’t hit that target, they get fined – that’s one of the reasons for the partnerships (the theory being that the emissions target will then be averaged across the whole fleet and so come down if e.g. a company that makes small cars partners with a company that makes larger vehicles).
The booklet notes £3.75bn is invested annually in R&D in the UK. Most of what, I assume, is in the vehicles of today, though it must be switching, pretty rapidly if they can see the same data presented here, to an EV focus.
What then, is the strategy for the car industry in the UK? In a market where there is a rapidly declining requirement for “engines”, a falling need for new cars altogether and an increasing focus on EVs?
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