The UK is delaying the switch to electric cars. Automakers are furious

By CNN Newsource

Published September 20, 2023 6:13 AM

By Hanna Ziady, CNN

London (CNN) — The UK government said Wednesday it would delay a ban on the sale of new gas and diesel cars by five years, angering carmakers who warned the move would undermine the industry’s efforts to switch to electric vehicles.

The delay was announced by Prime Minister Rishi Sunak as he watered down some of the government’s green energy policies, despite fierce opposition from climate campaigners, members of his own party and business.

“We seem to have defaulted to an approach that will impose unacceptable costs on hard-pressed British families,” Sunak said. If the government stuck to its current climate policies “we risk losing the consent of the British people.”

Sunak said people would be able to buy new gasoline and diesel cars until 2035, instead of 2030, aligning the UK with countries such as Germany, France, Spain, Italy, Canada and Sweden.

“We are going to ease the transition to electric vehicles,” he said. “We will still meet our international commitments and hit net zero by 2050.”

The UK announced the 2030 ban in 2020, putting it on course to become the first major economy to decarbonize road transport — an essential step towards meeting its net zero commitments.

Sunak’s plans had been widely reported and automakers criticized the expected policy shift earlier Wednesday. They have committed billions to electrify their fleets ahead of the deadline and were hopeful that the 2030 target would boost demand for electric vehicles.

“Our business needs three things from the UK government: ambition, commitment, and consistency. A relaxation of 2030 would undermine all three,” Ford (F) UK chair Lisa Brankin said in a statement.

“We need the policy focus trained on bolstering the EV market in the short term and supporting consumers while headwinds are strong: infrastructure remains immature, tariffs loom and cost-of-living is high,” Brankin added.

Just last week, BMW announced a £600 million ($743 million) government-backed investment to build electric Minis at its Oxford and Swindon factories in the UK. The Mini brand is set to become purely electric from 2030 globally.

“We and the whole automotive industry [need] clarity on the [EV] topic,” the German carmaker said in a statement shared with CNN.

Stellantis (STLA), which owns the Fiat, Peugeot and Citroën brands, echoed the call for clarity and said it was committed to achieving 100% zero emission new car and van sales in the UK by the end of the decade.

Earlier this month, the company — formed from the merger between Fiat Chrysler and France’s PSA Group — marked the start of electric vehicle production at its Ellesmere Port facility outside Liverpool. It invested £100 million ($124 million) to transform the plant for EV production.

‘Confusion’ will delay switch to EVs

The UK auto industry has been clawing its way back from rock bottom after car manufacturing hit a 66-year low in 2022. The industry had also fallen behind in the race to develop EVs due to a dearth of local battery production.

It received a shot in the arm in July when India’s Tata Group said it would invest more than £4 billion ($4.9 billion) to build a UK gigafactory set to provide almost half of the batteries the UK will need by 2030.

The latest policy change could set back that progress and ultimately harm the economy if it jeopardizes the future of the UK’s auto manufacturing sector.

If Britain is to be a leader in phasing out polluting vehicles, “consumers must want to make the switch, which requires from government a clear, consistent message, attractive incentives and charging infrastructure that gives confidence rather than anxiety,” said Mike Hawes, CEO of the Society of Motor Manufacturers and Traders, an industry body.

“Confusion and uncertainty will only hold them back,” he added. Reducing emissions from road transport “is the only way that you will achieve net zero,” Hawes told the BBC.

The government’s own independent adviser on climate policy, the Climate Change Committee shares that view. In a 2020 report, the committee said that the “full transition” to EVs will be “one of the most important actions to achieve the UK’s net zero target.”

Jobs at stake

In diluting the government’s climate policies, Sunak was likely bolstered by the outcome of a recent election in which his Conservative Party managed to retain a London seat it was widely expected to lose after voters rebelled against the city’s Ultra Low Emission Zone.

The ULEZ, which charges drivers £12.50 ($15.50) every day they use a car that doesn’t meet tough emissions standards, has been expanded by the opposition Labour Party’s London Mayor Sadiq Khan.

“We need sensible green leadership,” Sunak said “We’re stuck between two extremes: those who want to abandon net zero altogether … [and] others who argue with an ideological zeal we must move even faster.”

But he faces criticism from within his own party. Pulling back on the climate agenda “will not help economically or electorally,” former business and energy minister Alok Sharma, who was president of the COP26 climate conference in Glasgow, said on X, the platform formerly known as Twitter.

Simon Clarke, another Conservative lawmaker, said on X that the move will “shatter” the UK’s consensus on tackling the climate crisis.

It could also hurt an industry that employs 780,000 people and accounts for 10% of UK exports. Most industry executives agree that a shift to electric cars is inevitable. And that shift is already gathering momentum in Britain.

EVs are expected to account for nearly 18% of new car registrations by the end of the year, up from just 0.7% in 2018, according to the SMMT.

If policy missteps or waning government support cause the UK to become an unattractive place to manufacture EVs, that could threaten the future of Britain’s auto sector.

— Gemma Blundell-Doyle, Anna Cooban, Laura Paddison and Rob Picheta contributed reporting.