UK low-carbon automotive investment: the role of policy in the UK automotive sector renaissance

Abstract

In the early 2000s, the UK automotive industry was in a state of decline. Factory closures were commonplace, innovation levels modest, the supply chain shrinking, and environmental regulations seen as a threat. However, the industry has undergone a renaissance in the past decade, with UK low-carbon automotive investments of around £40 billion, increasing sector turnover, rising vehicle production volumes, and major OEM capacity expansions. This article sought to identify and understand the causal relationships between the UK's low-carbon policies and automotive industry investments via a triangulated methodology comprising an industry-wide survey, interviews of senior industry executives, extensive secondary research, construction of an investment database, and detailed policy analyses. It is concluded from the research that the strong co-operation between government and industry has proved vital to weathering the economic crisis and maintaining growth. Also, introduction of strong, cumulative industrial policies, and environmental regulations, together with funding programmes emerged as powerful driving forces for continued investment. Nevertheless, challenges remain and there is no room for complacency. Continued dialogue, support, and action are required to ensure that UK industry can deliver on low-carbon targets and build a sustainable industry and vehicle fleet.