Opportunities in batteries, powertrains, and electronics but industry must ramp up capacity 10-fold, report warns
The shift to electric passenger cars could deliver a £24bn boost to the UK economy over the next five years, but the automotive industry and its supply chains must ramp up capacity 10-fold in order to meet growing demand, a joint government and industry backed report today estimates.
With the UK government is looking to end sales of petrol and diesel cars by 2035 or potentially even earlier, almost all passenger cars will require some form of electrification by 2030, opening up multi-billion pound growth opportunities for the embattled auto industry, according to the report.
As a result, it estimates the growth in demand for electric cars has the potential to provide a £12bn boost in the UK market for batteries, £10bn of increased demand across the power electronics market, and a £2bn boost for electric machines by 2025 alone.
The findings come in a new report released today by the Advanced Propulsion Centre (APC), a joint government and industry backed research and development venture which was set up in 2013 to help accelerate the shift to net zero road transport.
APC CEO Ian Constance welcomed the encouraging projections, but warned that in order to deliver on the £24bn of potential demand that would result from the growing market for electric cars, the UK automotive industry and its supply chains need to expand capacity by as much as 10-fold compared to current levels.
"The electrification of vehicles is happening at pace, but if we are to deliver on our 2035 goals, and take our place as world-leaders, the supply chain will need to expand more rapidly - our research predicts up to 10-fold in the next five years," he said.
APC said it had released the report to coincide with UK government's promises to deliver a green recovery from the current economic crisis wrought by the coronavirus pandemic, with the Treasury expected to unveil a major economic stimulus package next month.
Constance insisted the UK was already well placed to deliver on the growth opportunity in electric passenger cars over the next decade or more if it delivers the right policy framework, with the report pointing to a global potential of over £97bn across various different manufacturing industries.
"The report reveals that opportunities for UK-based companies are available right across the spectrum," he explained. "In the next few years the APC expects to be funding projects developing technologies in everything from magnet manufacturing to semiconductors and electric steel to battery components."
Reports have suggested the government's stimulus package could include increased grants for electric cars and van, more support for electric vehicle charging infrastructure, new efforts to expand the supply chain for zero emission technologies, and a more ambitious date for ending sales of internal combustion engine cars.
However, environmental campaigners remain concerned that the stimulus package could also include a scrappage scheme that incentivises sales of conventional cars and a major road building programme, as well as a continuation of the long running freeze on fuel duty.
The UK car industry has been struggling with declining petrol diesel sales in recent years, while the spectre of a no-deal Brexit remains a major pressing challenge for a sector heavily reliant on Europe-wide supply chains and tariff-free trade. And while EV sales have been surging and car firms are racing to expand their battery car offerings, the electric car market has also been hit hard by Covid-19 crisis and still remains a fraction of the size of petrol and diesel markets.
As such, some leading auto firms have reportedly been lobbying the government hard to introduce a wide-ranging scrappage scheme and avoid the approach adopted by Germany and Spain, where scrappage schemes are offering generous grants for motorists switching to low emission vehicles, but excluding high emission cars from the incentives.
A group of leading UK transport academics and professionals last week wrote to Chancellor Rishi Sunak urging him to "resist that lobbying and to restrict the scheme to zero emission vehicles only".
The group - which includes Dr Steve Melia, senior lecturer in transport and planning at the University of the West of England; Dr Ian Taylor, director at Transport for Quality of Life; and Lucy Marstrand-Taussig, board member at the Transport Planning Society, as well as nearly 30 other leading experts - argues that the UK needs to pull forward its proposed 2032 phase out date for the sale of conventional cars and vans if it is to bring road transport into line with the country's net zero emissions goal.
"Emissions from transport have been rising in recent years," the letter states. "Transport is now the largest emitting sector, responsible for just over a third of all the UK's carbon emissions on a territorial basis. Clearly radical action is called for... In these circumstances, the government should impose an earlier date to phase out petrol and diesel vehicles and avoid the waste of public money which would occur if one government department were to subsidise the purchase of vehicles which another government department was seeking to phase out."
It also recommends that the government should introduce "incentives to encourage the purchase of electric bikes and mopeds/scooters, which would be affordable to more people".
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