The resignation of the high-profile CEO of Stellantis, Carlos Tavares, was the latest sign of the ongoing crisis afflicting some of the world’s most famous carmakers, as they negotiate the historic transition to electric vehicles. Last month, Stellantis – the maker of Fiat, Vauxhall, Jeep and Peugeot cars – announced the closure of its Vauxhall van factory in Luton, in part blaming the impact of electric vehicles sales targets mandated by Westminster. Ford has announced it intends to cut 4,000 jobs across Europe, including 800 in Britain, citing sluggish growth in EV sales as a contributory factor.
For Labour, and for a sector crucial to the green transition, this is a crucial moment. The government has restored a 2030 cutoff point – kicked back to 2035 by Rishi Sunak – after which the sale of pure internal combustion engines will be banned. But car manufacturers are lobbying for a watering down of the terms of the zero‑emissions vehicles mandate (ZEV), which requires manufacturers to sell a rising proportion of EVs between now and then. Meanwhile, on the right, Kemi Badenoch’s Conservatives and Nigel Farage’s Reform UK seek to caricature the country’s net zero obligations as a virtue-signalling threat to prosperity and growth.
In response, Labour needs to show leadership and conviction, backed up by the kind of resources that lead to a step change both in demand and in the national conversation regarding the green transition. The business and trade secretary, Jonathan Reynolds, recently affirmed: “When this government says that decarbonisation must not mean deindustrialisation, we mean it.” But the government should support manufacturers not by endorsing a slackening of momentum, but by the kind of market-transforming measures that would unlock greater demand.
There is no great mystery as to what would make a difference. The House of Lords environment and climate change committee has called for “targeted grants” to make EVs more affordable until price parity is reached with petrol and diesel vehicles. Most importantly, financial assistance designed to build up company fleets of EVs needs also to be directed at private consumers.
Charging infrastructure also needs to be rolled out more rapidly, especially outside London and the south-east, and in motorway service stations. The 20% VAT imposed on public charge points, which discriminates against drivers without access to off-street parking, needs to be lowered to something far closer to the 5% levy on household electricity. As MPs on the environment and climate change committee have stressed, such moves should be accompanied by a communications strategy which takes on the anti-green messaging now embedded in much of the media and across the right.
A proactive, front-foot approach from the government, sticking to the plan, is in the best interests of car manufacturers as well as consumers. Delay should not be seen as a viable option as China deepens its dominance of the EV market, meaning that company balance sheets may need to take a hit to ensure a corporate stake in the future. A lifeline for British automakers would be about ensuring the country becomes competitive in electric cars.
Labour’s side of the bargain, as the champion of Britain’s moral commitment to the green transition, should be to provide a financial framework that truly incentivises private buyers, and a state-of-the art infrastructure that instils confidence. With the right kind of leadership, Britain’s green transition can also deliver a powerful industrial legacy.
