Brexit and the pandemic hit car manufacturers in Great Britain hard. Now sales figures are increasing significantly and the government is attracting important investments – thanks to generous aid.
A “Gigafactory” from Tata, an electric car factory from Stellantis – and now two new electric models from Mini: Great Britain as an automotive location is moving into the fast lane. Prime Minister Rishi Sunak’s government is driving the transition to electric mobility with massive state aid and strict regulations for manufacturers.
On paper the plan works. While Mini had recently threatened to relocate almost all of its electric production to China, the BMW subsidiary has now announced that it will produce two new models in Oxford from 2026. To this end, the Munich-based group is investing the equivalent of 700 million euros, thereby securing 4,000 jobs in its Oxford and Swindon plants. “From 2030, the production volume will be exclusively electric,” said BMW.
Mini with its taillights in the Union Jack motif is “a British classic,” as Prime Minister Sunak emphasized. “Mini was and has always been aware of its history – Oxford is and remains the heart of the brand,” said brand boss Stefanie Wurst. The plant will celebrate its 110th birthday in 2023.
British government pays high subsidies
But the commitment to the home location definitely has financial reasons. The British government is investing an estimated 75 million pounds into the renovation. The billion-dollar “Gigafactory” of the Tata Group, to which the British brand Jaguar Land Rover belongs, is even supporting London with several hundred million pounds.
The demand for electric cars in Great Britain is high. “The electromobile trend reversal is becoming more and more visible,” comments the federally owned German foreign trade company Germany Trade and Invest (GTAI) in an unpublished study that is available to the German Press Agency. Accordingly, demand for fully electric vehicles rose by 38 percent in the first seven months of this year, while diesel car registrations fell by 17 percent year-on-year.
Great Britain wants to introduce an electric quota
But the increasing number of electric cars on British roads is not just due to increasing demand. “The state is also increasing the pressure on manufacturers, primarily through two measures,” emphasizes GTAI. From 2030 onwards, the sale of new combustion engines will be banned, and from 2035 no new hybrid vehicles will be allowed to be offered. Prime Minister Sunak recently confirmed that he would stick to the plan – despite calls for relaxation from his own conservative camp.
The risk for manufacturers is even more acute with a second planned requirement. From 2024 onwards, they should achieve at least 22 percent of their sales with electric vehicles. The quota should then be increased annually – up to 100 percent in 2035. Failure to comply will result in high penalties of around 17,250 euros per vehicle.
But among the ten most popular brands from 2022, none have yet reached the target, as GTAI emphasizes. “The closest is BMW with a share of 19.5 percent, followed by Hyundai (17.9 percent) and Mercedes (17.7 percent).” Given the rapidly growing demand for electric cars and significantly falling combustion engine registrations, these manufacturers have a good chance of fulfilling the “Zero Emission Vehicle Mandate” (ZEV mandate). However, the requirement has not yet been decided, and experts expect that car manufacturers will lobby for a more generous regulation.
Tightening the rules of origin would be an “extreme competitive disadvantage”
It’s not the only race against time. The tightening of the so-called rules of origin is also putting pressure on the industry. London and Brussels had agreed that from 2024 at least 45 percent of the value of electric cars must come from the United Kingdom or the EU so that the vehicles can continue to be exported duty-free. “Without their own Gigafactories, British manufacturers can only export their electric cars to the EU duty-free if they source the batteries from the Union,” says the GTAI study. “That would put the island at an extreme competitive disadvantage.”
Because Great Britain is primarily a production location, around 80 percent of the cars manufactured are exported, the majority to the EU. The German industry association VDA is therefore also calling for the current rules of origin to be extended again.