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It was a huge part of Labour’s campaign messaging, so now they’ve secured their position in power, what does Labour’s pledge to the EV sector mean for the automotive industry?
Labour’s stance on Net Zero
When Sunak announced that the 2030 target to end sales of new petrol and diesel cars and vans ZEV mandate target would be pushed back to 2035, [PC1] it showed a significant lack of strategy to support EV sales to meet the ZEV mandate’s targets [PC2] within the Conservative government.
As a point of reference, the Zero Emission Vehicle (ZEV) mandate specifies the proportion of new zero-emission cars and vans that manufacturers must produce annually until 2030. By 2023, 80% of new cars and 70% of new vans sold in Great Britain will be zero-emission, with this target rising to 100% by 2035.
So, it’s fully understandable that, when Sunak announced the push back, itThis was a cause for concern for many in the EV industry, as the mixed messaging messed manufacturers around and signalled to consumers that they didn’t need to switch to EVs as quickly, hence the downturn in EV sales, as out of the 7 million used cars sold or exchanged in 2023, only 120,000 were EVs.
In Labour’s automotive strategy, Shadow Secretary of State for Business and Industrial Strategy, Jonathan Reynolds had this to say about it:
“The manner in which the UK automotive sector has been treated by the Conservative government is entirely unacceptable. Worse still, the decision to water down the 2030 phase out of petrol and diesel vehicles is a huge setback for manufacturers who will have spent enormous amounts of money and time on the basis of these targets. Chopping and changing like this in government policy completely undermines the investment prospects for the sector.”
Now, compare this to Labour’s commitment to achieving net zero emissions, and suddenly it appears the EV topic is back and high on the agenda, especially as it is central to Labour’s environmental strategy.
This ambitious goal to reinstate the 2030 ban on ICE cars is expected to drive the expansion of the EV industry, as it will result in increased support for the development and adoption of electric vehicles, however, there is still work to do.
It’s not just a case of announcing this target and hoping that everything will just naturally fall in place; the government need to be extremely proactive in pushing out positive communications about electric vehicles without being seen to “lead a war on motorists”, including not forcing them to have EVs, but rather educating them on why they could be a good choice.
Investment in EV Infrastructure
One of the significant challenges facing the EV industry is the lack of adequate charging infrastructure. While the government made some progress a few years ago with a plan to improve public charging, delays in electricity connections for new infrastructure, such as charging hubs, have become a significant issue. Resolving these delays is critical, despite the complexities involved. A key priority must be to provide more affordable public charging options for people without off-road parking at home. Currently, EVs are much cheaper to run if you can charge them at home, but this advantage is lost if you rely on public charging.
One solution to make public charging more affordable is to remove VAT on public charging. EVs are moving towards price parity with petrol vehicles, but incentives for retail customers are still needed because they’re not buying EVs at the expected rate. However, any incoming government is unlikely to have the budget to subsidise EVs extensively. Increasing numbers of more affordable used EVs are now coming to market, which will help bridge this gap.
Labour has pledged substantial investments to expand and improve EV charging networks across the country. This includes installing more public charging points and supporting the development of rapid charging hubs, making it easier for EV owners to charge their vehicles conveniently and efficiently. Such investments will be crucial in alleviating range anxiety and encouraging more consumers to switch to electric vehicles.
Incentives for EV Adoption and Fleet Electrification
Labour is expected to introduce or enhance incentives aimed at accelerating the adoption of electric vehicles. These incentives could include tax breaks, grants, and subsidies for purchasing EVs, making them more affordable for consumers and businesses alike. By reducing the financial barriers to entry, Labour aims to increase the uptake of electric vehicles, contributing to the overall reduction in carbon emissions from the transport sector.
In addition to this, the new government recognises the importance of fleet electrification in achieving its environmental goals. Labour’s policies are likely to focus on encouraging businesses to transition their vehicle fleets to electric. This could involve providing financial support and incentives for companies to invest in electric vans, trucks, and other commercial vehicles, however, the specifics of this are still unknown.
Strengthening the Automotive Industry
The automotive industry is really important to the UK economy, in terms of GDP and jobs, but the last government doesn’t seem to have fully understood this.
Labour’s pledge is to “increase Battery factories on our shores, reliable charging networks in every part of the country, secure supply chains, increased consumer demand and 80,000 more high skilled jobs”.
There has been a very long delay in getting a battery gigafactory built in the UK, and we are now behind the curve with battery and EV production, especially as it’s estimated the UK will need at least 10 UK-based gigafactories by 2040, each producing 20GWh per year of batteries.
Labour says that wealth creation is its top priority – manufacturing EVs, batteries, and renewable energy technologies in the UK can help achieve this, and it plans to facilitate and part-finance this by utilising its National Wealth Fund to the sum of £1.5 billion towards the development of new gigafactories.
In terms of skilled workforce, the number of qualified EV technicians is growing, with 22% now able to work on EVs. However, the Institute of the Motor Industry still expects a shortage of 5,670 technicians by 2032.
Labour plans to address this by replacing the Apprenticeship Levy with a more flexible Growth and Skills Levy. This will help automotive businesses access a wider range of courses and training. Skills England will support this by working with local governments, businesses, training providers, and unions to ensure the training is affordable and meets business needs.
Research and Development
Investment in research and development is crucial for the advancement of EV technology. Labour’s policies are expected to prioritise funding for R&D initiatives focused on improving battery technology, increasing vehicle range, and reducing costs. By supporting innovation in the EV sector, Labour aims to make electric vehicles more efficient, affordable, and attractive to consumers.
But, we all know that to really drive innovation past the idea-generation point takes many minds to make it happen, especially in a continental sense, as addressing climate change and promoting the adoption of electric vehicles requires global cooperation. Labour pledges to create partnerships with international allies to share knowledge, technology, and best practices in the EV sector. By collaborating with other countries, the UK can accelerate its progress towards a greener future and contribute to global efforts to combat climate change.
The Jury’s Still Out…
The Labour government’s policies and pledges present significant opportunities for the EV industry, however, there is still a lot of work to be done before we can reinstate the confidence in the government’s promises. At GreenCarGuide, we’ll be keeping up with the developments as the progress, so watch this space.
