Latest perspectives on the UK automotive sector unveiled at the International Automotive Summit held in 2025
The UK government, led by the Department for Business, Energy & Industrial Strategy (BEIS), has unveiled its Industrial Strategy, a comprehensive plan aimed at restoring the UK as one of the top 15 global manufacturing nations by 2035. Launched ahead of the SMMT International Automotive Summit, this strategy seeks to boost the automotive sector in the UK, with a particular focus on electrification and sustainability.
At the heart of the strategy's development is dialogue, as underscored by The Rt Hon Jonathan Reynolds MP, secretary of state for business and trade, and president of the Board of Trade. The strategy emphasises the importance of sharing feedback and facilitating discussion across the industry to make impactful and practical changes.
A key component of the strategy is the doubling of annual investment in advanced manufacturing, including automotive manufacturing, by 2035. This investment is expected to lead to the production of 2.2 million new vehicles annually and create £50 billion ($68.5 billion) in value by 2030.
The strategy also addresses the issue of electrification, with Alison Nuttall, head of sustainability global affairs at JLR, explaining that the introduction of electric vehicles (EVs) across the JLR fleet will lead to "rapidly declining" tailpipe emissions. Sustainability has been placed at the centre of supply chain decision making at JLR, leading to more sustainable sourcing and operational emission reductions.
Mick Aires, chair of automotive council supply chain and senior manager, supplier risk management at Stellantis, outlined the "key elements" covered by the strategy, including energy, skills, investment in R&D, and cash. High energy costs in the UK are seen as a deterrent for future investment from international OEMs. David Johnson, head of public affairs at Michelin Tyre, suggests that companies should not be afraid of environmental regulation and to "be careful of divergence" from regulations from other markets, chiefly the EU, to retain international competitiveness.
The strategy sets forth changes to the UK's ZEV mandate, following feedback from the industry on its achievability. Some see these changes as detrimental, while others, like Laura Ayre, partner and ESG supply chain lead, Pinsent Masons, argue that they are watering down some of the drivers that OEMs had used to build their electrification plans over the last decade.
Three recent trade deals announced by the UK government were discussed at the event, including the EU, India, and the US. The trade deal with India removes barriers and drops the finished vehicle tariff for India from 100% of cost to just 10%, benefiting low volume, high-end manufacturers like Aston Martin or JLR. The Economic Prosperity Agreement between the US and UK sees UK exports to the US capped at 100,000 units per year but lowers the tariffs on finished vehicles to 10%.
Vanessa Butani, head of global sustainability at Volvo Cars, describes increased visibility across the battery supply chain as having led to pain points being identified and addressed. Victor Zhang, UK country director for OMODA & JAECOO UK, stated that local production is how Chinese OEMs reinforce their commitment to a market.
David Johnson, head of public affairs at Michelin Tyre, also emphasised the role of regulations in electrification, suggesting that companies should be careful of divergence from regulations from other markets, chiefly the EU, to retain international competitiveness.
The UK's most expensive price for electricity in Europe, with energy taxes being "six times higher" compared to other EU countries, is another challenge addressed in the strategy. Mick Aires, chair of automotive council supply chain and senior manager, supplier risk management at Stellantis, outlined the importance of addressing this issue to attract future investment from international OEMs.
Mike Hawes, CEO of SMMT, commented that the strategy "rightly recognizes" the importance of the automotive industry, and the role it plays in driving economic growth and job creation in the UK. The strategy, therefore, is a significant step towards shaping the future of the automotive sector in the UK, ensuring its competitiveness on a global scale.
