The Government are focused on transitioning our car industry from internal combustion engines to electric and other sustainably powered vehicles. Shortages of semiconductors and supply chain disruption have been key factors affecting recent UK and global car production numbers. However, the Government are accelerating and positioning ourselves for growth in electrification and unlocking industry investment.
I also appeal to Ministers to be more open. My question asked about car production. Car production in the UK has collapsed by over half since 2016—the worst performance of any car producer in Europe. Even the soaring demand for electrical vehicles is likely to be affected when, under the trade and co-operation agreement with the EU, car industry rules of origin exemptions for EVs come to an end this coming December. Brexit has created nothing but uncertainty, extra costs and supply chain problems for business. What incentives have the Government provided for international investors in the car industry to come to this country at a time when the major trading blocs, from which we are now excluded, are becoming more protectionist?
I sincerely thank the noble Lord for raising this point. It is important that we have a strong car industry in this country, and there are some legitimate reasons why the industry is transitioning. As many noble Lords who have been involved in this industry will know, we are moving from internal combustion engines to electric vehicles, which means some lines end and it takes time to start new lines. I am also very aware of the rules of origin issue, and I sincerely hope that our new relationship with Europe will allow us to have a more constructive conversation around that. It is in no one’s interest to have a trade war on cars.
I will finish by saying that there have been some great announcements over the last few years, and the Government have been extremely influential and relevant in supporting companies such as Nissan and Envision, with investment in the Vauxhall plant at Ellesmere Port and support for Pensana’s factory near Hull. Ford has committed just under £0.25 billion of investment in Halewood, and in 2022, Bentley announced a £2.5 billion investment to produce its first battery electrical vehicles by 2026, which will secure 4,000 jobs at its Crewe plant. There is certainly more that we can do, but we are acting, and we are trying to transition our car industry into one that is sustainable for the future.
My Lords, with growing Chinese competition in car manufacturing—in fact, China is dominating the EV market altogether—there are obviously even worse challenges to come. But would my noble friend like to say what he thinks about the EU proposal, announced yesterday, to go for what it calls a Net-Zero Industry Act to compete with the Inflation Reduction Act in the United States, because it is very nervous that Volkswagen and other European manufacturers are all about to move from France and Germany to the United States? How are we going to work it out in this situation? It seems rather dangerous.
I thank my noble friend for his comments. There has been a large amount of debate around the value of the Inflation Reduction Act, which I believe is the greatest oxymoronic legislative title in history, frankly, as I cannot believe that it will reduce inflation. Some of its measures are also relatively protectionist. The Government are investing heavily, not just in car manufacturing but in the research and development around it. For example, the Faraday Challenge amounts to £500 million, the Automotive Transformation Fund is hundreds of millions of pounds and the Advanced Propulsion Centre is providing huge amounts of much-needed money for new car production facilities and the inventiveness around that. It is not good enough just to try to find a bigger bazooka; we must ensure we focus on regulation and proper support for R&D, because our brains are our best defence.
My Lords, the Minister may call it “transitioning” but most people will call it “declining”. But let us take his word: transitioning. In order to create the industry for electric vehicles, Britain needs a gigafactory. The Government pinned their hopes on the Britishvolt factory. That failed, the company is being taken over and it will now be used for a different purpose. Last week I asked how the Government’s ambitions for a gigafactory would be fulfilled in the very near future. I did not get a detailed answer and I would be very grateful if the Minister could give me a proper answer now that explains how the industry is going to be able to rely on a gigafactory at the centre of government strategic thinking.
I greatly appreciate the pressing on this point. It is essential that we have strong battery manufacture capability in this country if we are to have an automotive industry. Do not be under any illusion: the Government are concentrating on this night and day. I draw the noble Baroness’s attention to the fact that I think the Britishvolt transition —if I can use that word again—was quite successfully handled. The Government pledged money, which should have worked in the financing. Unfortunately, it had to evolve to a new owner, but that transition has been successfully managed and it will still be making battery materials and technology.
As I highlighted earlier, through government support through the Automotive Transformation Fund, Nissan and Envision have signed a deal to produce batteries. Importantly, this is linked to a critical mineral supply deal we did with Indonesia that I personally helped steer through after the excellent work of my noble friend Lord Grimstone. This does not just give us battery manufacturing capability. As importantly, the focus of this Government is to make sure that we have the materials to supply these batteries, so that we can be ahead of our competitors.
My Lords, the Minister referred to our brains as being our competitive advantage. The Government reiterated in the integrated review refresh their ambition for the UK to be investing 2.4% of GDP in R&D. The OECD average is 2.7%. Does the Minister think that the Government’s ambition is likely to turn us into a so-called superpower in terms of science, and will that be sufficient to support the kinds of ambitions we ought to have in our car industry?
I thank the noble and gallant Lord for his point. I am glad he agrees with us that our brains are our best defence. I see around this House many good examples of that. I would stress that the Government are investing not simply in R&D in science and technology to become a science and technology superpower, but heavily in education, which is not necessarily classified under those figures. I saw recently an extra £2.8 billion being announced for education and training. We have further projects to ensure that our tertiary education remains the strongest in the world with, I might point out, three of the top 10 greatest universities in the world coming from this nation, which is something we should celebrate.
My Lords, why are the Government investing for their own fleet of cars in South Korea? My friends in Sunderland are bewildered as to why investment is going to South Korea and not to the Nissan Leaf in Sunderland.