How to make the UK appealing to car manufacturers again

To tackle that, the strategy includes something called the British Industrial Competitiveness Scheme, which, the government said, would reduce electricity costs by around £35-£40 per MWh up to 2030 for up to 7000 businesses in the eight sectors, including automotive, that it judges to be most in need of support. 

Those businesses will be exempt from paying specific energy cost add-ons that support the renewables obligation, feed-in tariffs and the capacity market (the last of which is to support keeping plants on standby). The SMMT has calculated that average UK energy taxes are more than six times higher than those in the EU at 6.2p per kWh versus 1p per kWh.

This so-called Industry Supercharger will bring costs “more in line” with other major economies – for example, Germany – the government said.

“That’s welcome,” Steve Turner, assistant general secretary at trade union Unite, told the audience at the recent SMMT Summit: “You've got to do something about the price of energy if we're going to be a superpower for battery manufacturing,” he said, citing a particularly energy-hungry business.

Also on the energy front, the government has promised to speed up grid connections and planning for on-site renewable generation. “Don't underestimate the importance of that,” said SMMT chief Mike Hawes at the Summit. “I think every major manufacturer I speak to wants to invest in renewable energy on site. They talk to the National Grid, who says, ‘yeah, of course, you can have that in 2033, 2034’, which is out of scope.”

The government has also promised to make £2.5 billion available to fuel research and R&D to spend between now and 2030 to shore up UK’s rickety supply chain. Of that money £2bn was announced by the Conservative government in November 2024.

This, the government hopes, will help double investment between now and 2035. After an impressive £20bn of investment in British automotive and battery manufacturing industries was promised in 2023, that number shrank to £3.6bn in 2024 and £2.7bn in the first part of 2025, according to SMMT figures.

The 10-year plan has been applauded by industry leaders, who were forced to watch helplessly as the previous industrial strategy set out in 2017 under then prime minister Theresa May was essentially abandoned in 2021 by the Boris Johnson government. 

“We welcome this strategy. I think the duration of it is important,” Phil Jones, managing director of Leyland Trucks told the Summit audience. “That does help our investment case when we're pitching within our company for investment in the UK rather than in other plants in Europe or the US.”

Automotive leaders including Ford UK head Lisa Brankin also welcomed the support for training, another key concern of automotive as they pivot to an electric and digital future.

The UK now finds itself in a fairly good place as an export hub. The uncertainty of Brexit was mostly resolved by a tariff agreement with the EU that leaves a rump of customs faff that’s expensive and time-consuming – but not debilitating to incomers. 

A trade agreement with India, meanwhile, promises to cut tariffs on high-end cars from 100% to 10%, subject to a quota that has yet to be decided. “It would put all the luxury British brands in a position where we’re almost in the normal price category of the highest-spec premium cars,” Aston Martin head Adrian Hallmark told the Summit.

Meanwhile, the 10% tariff that the government negotiated for cars exported to the US might be four times higher than the 2.5% rate that existed before April, but it is considerably better than the 27.5% that non-UK exporters are charged. “We're less worse off than our European and non-European competitors, so we have a small relative advantage there,” said Hallmark.

The 100,000 quota and rules of origin issue (yet to be agreed) means that China is unlikely to use the UK as a friendly springboard into the US, so if they come to the UK, it would be to sell into the EU. 

Fast-growing car company Chery is one brand that sounds agreeable to a move. “If we, as a brand, want to be here, to be committed, to be here, [manufacturing] is something that we should do,” UK head of Chery’s Omoda and Jaecoo brands, Victor Zhang said at the Summit. “This is the open topic. Everything is on the table. We are considering. We are talking with the relevant parties.”