Will High Energy Prices Hit UK Car Industry?

Tue 5th Jul 2022

As if the UK automotive industry doesn’t need another thing to worry about, the Society of Motor Manufacturers and Traders is now warning that the sector is at risk from soaring fuel prices.

Like most within the UK, whether domestically or industrially, high gas and electricity prices are hitting hard, and according to analysis from the SMMT, British businesses are at a ‘competitive disadvantage’ due to 50 per cent rise in energy costs.

It will hurt many to know that energy bills in the UK are much higher than the rest of Europe, and for British motor manufacturers that means they are paying £50m more per annum than European rivals. That bill will rise by a further £90m later this year.

Ironically, British manufacturing is at the heart of an electrification push for motoring, but thousands of jobs are at risk, and years of EV innovation is under threat unless the government takes decisive action.

At the SMMT Annual Conference this week, the organisation published a roadmap for the industry’s future, ‘From Full Throttle To Full Charge’, part of which addresses the short term needs of the manufacturers.

“From Covid impacts to component shortages, supply chain disruption to trade uncertainty, and regulatory change to rising inflation, the challenges facing this sector are immense. Nevertheless, addressing the UK’s high energy costs is the industry’s number one ask,” said SMMT Chief Executive, Mike Hawes.

“Help with energy costs now will help keep us competitive and be a windfall for the sector, stimulating investment in innovation, R&D, training – all reinvested in the UK economy. With the right backing this sector can drive the transition to net zero, supporting jobs and growth across the UK and exports across the globe.

“Our plan, From Full Throttle to Full Charge, sets out how industry can work with government to build a UK automotive ecosystem fit for a zero emission future. If there is the will, the effort and the action from government, they will find it matched by that of the UK industry in investment and competitiveness.”