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The UK is currently the sixth-largest car manufacturer in Europe.
The UK Sustainable Investment and Finance Association (UKSIF) has called on the Government to tackle global competitiveness for green investment by building a strategy that provides the required certainty and clarity for the private sector to invest in UK gigafactories and domestic battery manufacturing.
The plea is based on the findings from a survey conducted by the UKSIF, which found that 87% of the UK transport sector believes that providing a consistent approach to Government partnerships with investors would have a positive effect on investment in the nation.
Moreover, the research, which surveyed 100 businesses across the transport sector, revealed that more than half (57%) of major transport companies have or plan on moving investments out of the UK to a market that is more supportive of their sustainability goals.
UKSIF’s chief executive James Alexander said: “A lack of clarity and certainty on the long-term strategy for the automotive sector, is destroying investor confidence.
“Manufacturers and investors find themselves in limbo – questioning how or why to invest in this sector, and the long-term strategy for UK transport.”
Earlier this year, the Business and Trade Committee warned that the Government has failed to grasp the extent of current policy gaps, potentially risking around 160,000 jobs in the automotive industry.
The UK, currently the sixth-largest car manufacturer in Europe, faces significant competition in the electric vehicle (EV) sector, with other countries aggressively investing in this fast-growing industry.
International competition and domestic growth
The UKSIF highlights that the UK’s approach to catalysing investment for decarbonisation lacks considerably when placed in comparison with other international policies such as the US’s Inflation Reduction Act (IRA).
The IRA aims to inject investment into green technology across the US through grants, credits and tax incentives. The legislation requires businesses to conduct green technology production and assembly in the US to qualify for tax credits, a move aimed at boosting domestic manufacturing.
Since being signed into law in 2022, the IRA has attracted more than $110bn of private capital investment into new clean energy manufacturing, including more than $70bn into EV supply chains.
To support domestic growth, the UKSIF is also calling on the Government to focus on locations where skilled workforces currently exist or can be repurposed to attract more investment, a sentiment shared by 81% of the transport sector, according to the survey.
These target locations include Scotland, specifically Aberdeen, and the West Midlands, including Coventry, as well as the Northeast.
Alexander added: “The Government’s failure to invest in our home-grown talent and boost investment in areas where a skilled workforce in the automotive industry already exists, risks creating a skill shortage that could see us fall even further behind.
“The UK is in desperate need of consistent policy, backed by ambitious targets to retain its powerful position as a world leader in sustainable finance and innovation.”
The UK lacks policy, strategy, and plans in almost every important area, be it industry, energy, transport, or sciences etc. The current approach appears to be “Bring us your no-brainer ideas and we will think about supporting you”. Hardly inspiring for investors, or the researchers and educators in our education sector.