UK car production urges government action on energy costs

Automotive sector's green ambitions hampered by grid delays and high electricity prices

UK car production urges government action on energy costs

The UK automotive industry, which contributed £92 billion turnover and £25 billion value added to the economy last year, is calling on the government to address high energy costs and infrastructure limitations.

British manufacturers achieved a milestone last year by generating 60.3 gigawatt-hours of clean electricity from solar panels and wind turbines at their facilities, a 30.3 per cent increase from the previous year. This renewable generation helped prevent nearly 12,500 tonnes of CO2 emissions.

Despite these efforts and a 2.4 per cent reduction in energy consumption per vehicle, the industry faces challenges. Electrified models now represent over a third of UK car production and require more energy to manufacture. However, grid connection delivery times, averaging nearly 14 years, create a significant bottleneck for expanding renewable energy capacity. This delay threatens the energy transition and the shift to electric vehicle production, risking the substantial investments manufacturers have already made.

High electricity costs further affect the sector’s competitiveness, with UK manufacturers reportedly paying double the European average for power. This cost disadvantage impacts investment in new products, production lines, and workforce development. While Labour’s Industrial Strategy has recognised the automotive industry’s economic importance and proposed reforms to reduce electricity bills, the planned relief on standing charges currently applies to battery production and other energy-intensive industries, but not automotive businesses directly.

Mike Hawes, SMMT Chief Executive, stated that Britain’s automotive factories are crucial for the country’s decarbonisation goals. He emphasised that faster grid connections and reduced energy costs are necessary to unlock investment. Manufacturers advocate for the proposed relief on standing charges to be extended to automotive businesses, citing their trade intensity and role in achieving net zero. Hawes concluded, “The industry cannot afford to wait, and nor can the country if our net zero ambitions are to be realised.”

Source: GB News

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