Business secretary Andrea Leadsom has announced plans to invest “up to £1bn” in the car industry, to accelerate the shift towards electric vehicles and reduce carbon emissions, but warned the sector will have to change after Brexit.
The move comes as climate change moves up the political agenda, with the Conservatives keen to burnish their green credentials ahead of the party’s conference this weekend.
The £1bn pot of funding for the car industry has not yet been allocated to specific projects, but officials said it will be used to support research and development, as well as “major investments in the manufacturing of batteries, electric motors, drives, power electronics and hydrogen fuel cells”.
Mrs Leadsom admitted the car industry would have to “adjust” its “just in time” business model after Brexit, reducing its reliance on the fast flow of components from mainland Europe through Dover.
“The just in time supply networks are vital to the current operation of the automotive sector,” she told the Financial Times. “Over a period of time, with a free trade deal [with the EU], it is perfectly possible for companies to adjust the way they do things.”
She said this would “by no means just involve onshoring” some production. “One of the interesting observations in preparing for Brexit is the incredible reliance on the short straits,” she said, referring to the Dover-Calais route.
“The UK has many ports, we’re an island nation. It would be possible to establish very good just in time supply chains capability at other ports and using technology.”
The car industry is unlikely to respond enthusiastically to the idea that future trade friction at Dover might be overcome by using longer sea crossings to avoid customs bottlenecks.
The sector is grappling with falling sales in the UK this year, and some overseas carmakers with factories in Britain have announced plans to close factories or scale back production.
Ministers have been facing mounting questions about whether they are doing enough to secure the industry’s future, particularly as it transitions from petrol and diesel cars to electric vehicles.
While some overseas carmakers have invested in UK battery development, others have tended to focus technology closer to their headquarters. For example, Germany’s BMW is importing batteries for the electric Mini that will be assembled at its Oxford factory.
Meanwhile, the government announced that updated building regulations would mean that new homes should cut their carbon emissions by 78 per cent from 2025.
It also outlined plans for a new Great Northumberland forest, where up to 1m trees will be planted by 2024.
In June, Britain became the first leading economy to set a net zero carbon emissions target for 2050.
Labour used its annual conference this week to commit to net zero by 2030.
The government’s latest announcement comes just days after the UN climate summit, at which teenage activist Greta Thunberg berated world leaders for their failure to combat global warming.
Additional reporting by Camilla Hodgson
