Written by Kunal Sawhney, CEO, Kalkine Group

Dutch multinational automotive company Stellantis N V said it would invest up to £100 million into its subsidiary, the Vauxhall car manufacturing factory in Ellesmere Port, located in the northwest of the UK.  The site is expected to be Europe’s first dedicated electric vehicle plant and help secure 1,000 jobs at the site and 3,000 more in the supply chain.

Stellantis plans to manufacture electric vehicle vans such as the Vauxhall and Opel Combo-e, Peugeot e-Partner and Citroen e-Berlingo vans and their passenger car variants from later in 2022. The move comes ahead of the UK’s plans to ban the sale of fossil fuel powered vehicles from 2030, while hybrid vehicles will be banned by 2035.

Recently, Japanese automaker Nissan had also announced plans to set up a £1 billion car and battery Gigafactory in Sunderland located in the northeast of England, as part of the UK’s electrification plans. The plant is expected to create up to 6,000 new jobs.

UK’s auto sector challenges

While the UK has pledged ambitious climate targets of achieving net zero emissions by 2050, the country lacks a robust electric vehicle infrastructure to ensure electric vehicles are adopted on a mass scale. According to a report by the UK car industry body, the Society of Motor Manufacturers and Traders (SMMT), the UK needs at least 2.3 million charging points to meet its electric vehicle demand by 2030 and several more Gigafactory battery plants.

While the Vauxhall plant and Nissan Gigafactory will help with job creation, the SMMT report found that if the UK auto sector cannot transition to net zero emissions without the right strategy, it could cause about 90,000 job losses in the sector.

Brexit is another challenge. The UK will have to either produce electric cars in the UK or the EU by 2026 to avoid attracting tariffs under the current EU-UK trade agreement.

Government recommendations

One of the key ways the government can help support the auto industry’s net zero transition is by offering government support in the form of increasing direct investment in the UK’s battery supply chain and commit to creating 60 GWh of battery production through building more Gigafactories.

Extending existing electric vehicle incentives and launching new measures such as exempting electric, hydrogen and plug-in hybrid cars from value added tax, Vehicle Excise Duty and company car tax are some more ways for the government to help the auto sector’s transition to electric vehicles.

Moreover, creating new policies such as incentivizing carmakers to sell zero emission cars, such as the laws in California, US could also help the sector.

Furthermore, reducing operating costs, investing in skilling workers in the sector, and improving the UK’s overall competitiveness will better support the industry’s net zero goals.

Sector recommendations

Also, the ongoing global computer chip shortage has impacted automaker’s electric vehicle production. According to current estimates, the semiconductor chip shortage is expected to last until the end of 2021.

Using cutting edge technologies such as the industrial internet of things (IoT) can help solve the future supply chain crises relating to chip shortage in the future by integrating IoT with a business’s workflows and systems.

Additionally, increasing investment into the UK’s semiconductor industry, particularly in areas such as chip manufacturing and different streams of the supply chain, is another key component to addressing the shortage issue.