SMMT: UK EV Industry Faces Uncertainty Amid Policy Shifts
The EV industry has been in turmoil recently following the Trump administration’s tariffs and rollback of EV targets and incentives. As the global EV market stands at the precipice of significant transformation, industry experts and manufacturers are voicing their concerns over the long-term impact of these policy changes.
Mike Hawes, Chief Executive of the Society of Motor Manufacturers and Traders (SMMT), provided insights into the current state of the UK EV market, which serves as a key benchmark for measuring industry trends over the next 12 months.
UK vehicle production declines amid EV transition
The UK’s vehicle production fell below one million units in 2024, highlighting the challenges of shifting from internal combustion engine (ICE) vehicles to EVs. According to the latest SMMT data, total production dropped by 11.8% to 905,233 units, with car production declining by 13.9% to 779,584 units.
declining by 13.9% to 779,584 units.
Although commercial vehicle (CV) output grew by 4.0%, reaching its highest level since 2008, it was insufficient to counterbalance the decline in car manufacturing. Industry leaders are urging the UK government to expedite industrial and trade strategies to enhance competitiveness in the global automotive market.
Key factors contributing to production decline
The UK automotive industry is navigating a complex transition to EV production while contending with economic pressures and shifting international demand.
- End of ICE vehicle production: The transition to EVs has led to temporary disruptions in manufacturing.
- Weak global market demand: A decline in exports to key markets has impacted production volumes.
- Slower EV adoption: Economic uncertainties have slowed consumer adoption of EVs.
December 2024 marked the tenth consecutive month of decline, with production dropping 27.1% to 45,022 units.
UK exports and trade considerations
xports are a major driver of UK vehicle production, with nearly 80% of cars manufactured for international markets.
The top three destinations for UK-made vehicles in 2024 were:
- European Union – 54.0% (decline of 24.3%)
- United States – 16.9% (growth of 38.5%)
- China – 6.6% (decline of 21.8%)
While exports to the EU and China dropped significantly, shipments to the US surged, reinforcing the importance of stable trade agreements to maintain and expand market access. Other key export markets included Turkey, Japan, Australia, Canada, South Korea, the UAE, and Israel.
A temporary dip in EV production
Despite heavy investments in electrification, UK manufacturers saw a temporary decline in EV production. The output of battery electric vehicles (BEVs), plug-in hybrids (PHEVs), and hybrid electric vehicles (HEVs) fell by 20.4% to 275,896 units. However, they still accounted for 35.4% of total production—the second-highest on record.
Industry investments remain strong, with US$24.8bn pledged in 2023 and an additional US$4.35bn in 2024 to bolster the UK’s EV manufacturing capabilities. Analysts predict a rebound as new EV models and battery production facilities come online.
Industry leaders call for government support
SMMT’s Mike Hawes highlighted the need for government intervention to support the industry’s transition:
“Amid significant geopolitical and trade tensions, UK manufacturers are set on turning billions of pounds of investment into production reality, transforming factories to make new electric vehicles for sale around the world. Growing pains are inevitable, so the drop in volumes last year is unsurprising. With new, exciting models and battery production on the horizon, the growth potential is clear.”
Hawes and other industry leaders are calling on policymakers to:
- Foster a competitive manufacturing environment with clear industrial strategies.
- Strengthen trade agreements to ensure tariff-free exports, particularly with the EU.
- Implement consumer incentives to accelerate the transition to EVs.
Looking ahead: Future growth potential
Despite the current setbacks, forecasts suggest that UK car and light van production could rise in the coming years:
- 2025: 839,000 units
- 2027: 930,000 units
- 2028: Potentially exceeding 1 million units
- 2030: Over 1.1 million units
Achieving the projections will depend on economic conditions, market demand, and regulatory support. If successful, the UK automotive sector could become a US$124bn global trade hub, contributing US$62bn to the UK economy over the next decade.
As UK manufacturers continue investing in zero-emission technology, the role of government policies in ensuring the nation remains competitive in a protectionist global market will be critical. With strategic planning and collaboration between industry leaders and policymakers, the UK EV sector can potentially drive the future of sustainable transportation while overcoming its current challenges.
Stay informed and inspired with the EV Magazine community by signing up for our free weekly newsletter. Each week, receive in your inbox the latest industry news and in-depth insights into the world of electric vehicles, sustainability and cutting-edge innovations
Subscribe now, don’t miss the opportunity to stay ahead in the fast-evolving EV industry.
EV Magazine is a BizClik brand
