Car Industry

Commons Urgent Question

My Lords, I shall now repeat in the form of a Statement an Answer to an Urgent Question given in another place:

“The automotive industry is a vital part of the UK economy, and it is integral to delivering on levelling up, net zero and advancing global Britain. After a challenging period, where Covid and global supply chain shortages have impacted the international automotive industry, the UK sector is bouncing back. Production is increasing and in 2022 the UK’s best-selling car was the Nissan Qashqai—built in Sunderland.

The automotive industry has a long and proud history in the UK. We are determined to build on our heritage and secure international investment in the technologies of the future—to position the UK as one of the best locations in the world to manufacture electric vehicles.

We are leveraging investment from industry by providing government support for new plants and upgrades to ensure that the UK automotive industry thrives into the future.

Companies continue to show confidence in the UK, announcing major investments across the country including: £1 billion from Nissan and Envision to create an EV manufacturing hub in Sunderland; £100 million from Stellantis for its site in Ellesmere Port; and £380 million from Ford to make Halewood its first EV components site in Europe. We will continue to work through our automotive transformation fund to build a globally competitive electric vehicle supply chain in the UK, boosting homegrown EV battery production, levelling up and advancing towards a greener future.”

My Lords, I watched this Urgent Question in the other place keenly today but was left disappointed by the number of questions actually answered, so I thank the Minister for coming here to answer ours.

This situation is extremely serious. As we know, all manufacturing is facing supply chain difficulties globally, and our car industry is suffering. Does the Minister agree that our trading relationship with the EU should reflect this? Will the Government follow the sector’s advice by reopening negotiations on the trade and co-operation agreement to protect it from further risk?

My Lords, the Government are acutely aware of the global challenges that the UK car industry faces. We have been leveraging private investment, alongside government support, to bring EV manufacturing to UK shores. The UK remains highly attractive; our workforce is among the most productive in Europe, and we excel in R&D and innovation. The DBT Secretary of State is aware of this issue facing the automotive sector, and is raising this with her counterparts in the EU.

My Lords, on 2 March this year I asked a Question of the noble Lord, Lord Johnson, the Minister of State for the Department for Business and Trade. It was exactly on this issue. Unless the renegotiation is successful, the manufacturers of electric cars will not be able to export their vehicles to the European Union without a 22% tariff. The noble Lord mentioned Stellantis, which is one of the companies that yesterday made the point that this is very urgent. I did not get a sense of urgency from the Minister.

McKinsey estimates that between £5 billion and £18 billion will be required to deliver the domestic battery capacity we need in this country. Even if that money was available now, which it is not, and even if the plans were approved now, which they are not, there would not be a battery plant at the end of this year. Can the Minister reassure your Lordships that the Government are actually on this case, and that the urgency of this is understood, because the industry does not get that impression?

The noble Lord makes some very good points. I assure him that the Government are absolutely on the case. We are not alone; the EU has challenges of its own.

It is a quid pro quo.

It is a quid pro quo. This whole question of battery manufacture has caught a number of countries, including us, where they do not particularly want to be. The Government have invested in this country; the joint investment with the OEMs is about £1.5 billion and we have put a further £2.8 billion in. That will probably not do it, but I assure the noble Lord that we are absolutely on it.

My Lords, I declare my interest as the Prime Minister’s trade envoy for Uganda, Rwanda and the DRC. My noble friend the Minister must have seen the article in the Times last week about the exodus of car manufacturers from the UK because of the shortage of batteries. I have just returned from Rwanda, where I met Ministers and President Kagame, who expressed interest in a joint venture manufacturing plant for batteries, because they have the necessary raw materials. Will my noble friend support such an initiative to source these important electric car batteries for the UK’s car industry?

I thank my noble friend for the points he made and appreciate his relationship with those key African states. In the challenges we face with EV manufacturing, any form of help can be only welcomed and supported. I would very much like to meet him and see what can be done.

My Lords, is the Minister confident that batteries for electric cars will be produced at the site north of Blyth which was earlier identified for that purpose? If so, when?

My Lords, I cannot give a direct answer. I will write to the noble Lord later, but I assure him that the Government are absolutely on it. I completely understand that the whole question of batteries and trying to resolve this country of origin issue is fundamental to the future of automotive manufacturing in this country.

My Lords, the USA is now pouring trillions of dollars into green investment and the EU is rapidly following suit. Germany alone is investing far more than we are. What changes will there be to UK government policy to ensure that, now we stand alone as a manufacturing nation, we can compete on this advancing front where it is so important that we make our mark early?

The money that has already been allocated is fundamental to the future. Through the APC, we have invested in 188 collaborative zero-emission, low-carbon R&D projects to the tune of about £1.4 billion. That is a clear indication of our level of commitment. I see no reason why that should not continue.

My Lords, the noble Lord opposite referred to the raw materials necessary for electric car batteries. Will the Minister acknowledge the concerns about the environmental and labour conditions under which such materials are sourced? Will the Government pay very close attention to this?

Not just the Government but the manufacturing companies take this very seriously. Everybody appreciates that these rare materials are finite; it is right at the front of our thinking.