Blogs from the Blackstuff
Blogs from the Blackstuff
Professor John Clancy and Professor David Bailey
Blogs from the Blackstuff
Blogs from the Blackstuff
Blogs from the Blackstuff
By Professor David Bailey
7th September 2026
JLR’s latest job cuts should be treated as much more than another round of corporate restructuring. They are a warning that Britain’s automotive industry is being hit by a near perfect storm. The consequences could extend far beyond JLR.
The UK car industry is being squeezed from almost every direction at once. Demand is weak and uncertain. Chinese manufacturers are becoming increasingly formidable competitors. Trade tensions and tariffs are reshaping global supply chains. UK industrial electricity prices remain exceptionally high. Manufacturers face enormous investment requirements to move towards electric vehicles. And the wider global trading environment is becoming more difficult and unpredictable.
Any one of these pressures would be difficult enough. The problem is that they are reinforcing one another.
When margins are squeezed, companies cut costs. Investment is delayed or redirected. When investment is delayed, plants and supply chains become less competitive. And when competitiveness deteriorates, future investment increasingly goes elsewhere. That is how industrial decline can become self-reinforcing.
This is why it is too easy, and ultimately too superficial, to portray the difficulties facing JLR simply as the consequence of the cyber-attack or poor management decisions.
Of course management matters. Companies make strategic choices, and some choices will inevitably prove better than others. JLR has made its own decisions about products, markets, brands, investment and electrification. The jury is out, for example, on the Jaguar luxury EV re-launch.
But governments also make choices. They determine the industrial environment in which companies make those decisions. And here Britain needs to have a much more uncomfortable conversation about whether its policies are consistent with its ambition to remain a major automotive manufacturing nation.
The UK cannot simultaneously demand rapid electrification, impose increasingly challenging zero-emission vehicle targets, have some of the highest industrial electricity costs among major economies, and also expect manufacturers to continue investing billions of pounds in British factories and supply chains as though these pressures do not matter.
Something has to give.
The government urgently needs to bring down UK industrial electricity costs. This is not some minor issue for manufacturers to absorb through greater efficiency. Electricity is a fundamental input into modern industrial production. If producing a car in Britain is structurally more expensive because the energy required to manufacture it is substantially more expensive, Britain is effectively imposing a competitiveness tax on its own industry. And the government’s British Industrial Competitiveness Scheme (BICS) frankly doesn’t go far enough or fast enough.
The government also needs to provide a much stronger and more predictable framework for automotive investment. Companies deciding where to commit billions of pounds aren’t simply comparing wage costs. They’re looking at energy prices, regulation, taxation, infrastructure, skills, market access, supply chains and political stability. Investment will flow towards locations where the overall proposition is strongest.
And then there is the increasingly contentious issue of the ZEV mandate.
The answer is not to abandon the transition to electric vehicles. The transition is happening and Britain of course needs to be part of it. The question is whether the transition is being managed in an economically sustainable way.
Manufacturers say they have already spent more than £10 billion on discounts to stimulate EV demand, while industrial energy costs are reported to be some 80% higher than anticipated when the mandate was designed. If consumers are not moving towards EVs at the pace assumed by policymakers, simply increasing the regulatory pressure on manufacturers does not magically create demand.
Indeed, there is a danger that a badly designed mandate forces manufacturers to subsidise EV sales on a huge scale, weakening their profitability precisely when they need capital to invest in new electric models, batteries, software and manufacturing facilities.
That makes little economic sense.
A successful industrial transition requires companies that are financially strong enough to invest. Policy should therefore encourage electrification without inadvertently undermining the companies expected to deliver it.
The government does deserve credit for recognising the strategic importance of the sector. The DRIVE35 programme, including £2.5 billion of funding through to 2035, demonstrates that ministers understand the need to support the automotive transition.
But the question is whether the scale and speed of intervention match the scale and speed of the challenge. Britain is competing with countries aggressively supporting their automotive industries while simultaneously trying to build domestic battery, semiconductor and EV supply chains. The global race is not simply about who can manufacture the cheapest car. It is about who can capture the investment, technology, intellectual property and supply chains of the next generation of mobility.
This is where the stakes become much bigger than JLR.
Automotive manufacturing generates far more than jobs on the factory floor. It anchors research and development, engineering expertise, component suppliers, logistics, universities, technical skills and regional economies. A major vehicle plant creates an industrial ecosystem around it.
Once that ecosystem disappears, it is extraordinarily difficult to recreate. Britain has already experienced the consequences of allowing manufacturing capability to erode. The danger now is that the country repeats the mistake with electric vehicles: importing the technology, batteries and eventually the vehicles while congratulating itself on having achieved the transition to net zero.
That would be a remarkably hollow victory.
The central question is therefore not simply how many jobs JLR cuts. It is whether Britain wants to remain a major automotive manufacturing country or become increasingly dependent on vehicles designed, engineered and built elsewhere.
That is an industrial strategy question. And it requires a much stronger response than telling manufacturers to become more competitive.
The government should treat the current situation as a strategic industrial emergency. Get industrial energy costs down. Give manufacturers a more realistic and flexible route through the EV transition. Provide long-term certainty for investment. And substantially increase the incentives for companies to invest in UK production, batteries and supply chains.
The alternative is deeply uncomfortable. Britain could find itself pursuing decarbonisation while simultaneously losing the industrial capacity needed to deliver it. We could reduce emissions from cars made in Britain while importing an increasing proportion of the cars, batteries and technologies from overseas.
That is not a successful industrial transition. It is deindustrialisation wearing a green badge. JLR’s job cuts should therefore be seen as a warning shot. The question is whether Westminster hears it and acts.
Professor David Bailey works at the Birmingham Business School and is a Senior Fellow at the UK in a Changing Europe programme.
The UK car industry is being squeezed from almost every direction at once. Demand is weak and uncertain. Chinese manufacturers are becoming increasingly formidable competitors. Trade tensions and tariffs are reshaping global supply chains. UK industrial electricity prices remain exceptionally high. Manufacturers face enormous investment requirements to move towards electric vehicles. And the wider global trading environment is becoming more difficult and unpredictable.
Any one of these pressures would be difficult enough. The problem is that they are reinforcing one another.
When margins are squeezed, companies cut costs. Investment is delayed or redirected. When investment is delayed, plants and supply chains become less competitive. And when competitiveness deteriorates, future investment increasingly goes elsewhere. That is how industrial decline can become self-reinforcing.
This is why it is too easy, and ultimately too superficial, to portray the difficulties facing JLR simply as the consequence of the cyber-attack or poor management decisions.
Of course management matters. Companies make strategic choices, and some choices will inevitably prove better than others. JLR has made its own decisions about products, markets, brands, investment and electrification. The jury is out, for example, on the Jaguar luxury EV re-launch.
But governments also make choices. They determine the industrial environment in which companies make those decisions. And here Britain needs to have a much more uncomfortable conversation about whether its policies are consistent with its ambition to remain a major automotive manufacturing nation.
The UK cannot simultaneously demand rapid electrification, impose increasingly challenging zero-emission vehicle targets, have some of the highest industrial electricity costs among major economies, and also expect manufacturers to continue investing billions of pounds in British factories and supply chains as though these pressures do not matter.
Something has to give.
The government urgently needs to bring down UK industrial electricity costs. This is not some minor issue for manufacturers to absorb through greater efficiency. Electricity is a fundamental input into modern industrial production. If producing a car in Britain is structurally more expensive because the energy required to manufacture it is substantially more expensive, Britain is effectively imposing a competitiveness tax on its own industry. And the government’s British Industrial Competitiveness Scheme (BICS) frankly doesn’t go far enough or fast enough.
The government also needs to provide a much stronger and more predictable framework for automotive investment. Companies deciding where to commit billions of pounds aren’t simply comparing wage costs. They’re looking at energy prices, regulation, taxation, infrastructure, skills, market access, supply chains and political stability. Investment will flow towards locations where the overall proposition is strongest.
And then there is the increasingly contentious issue of the ZEV mandate.
The answer is not to abandon the transition to electric vehicles. The transition is happening and Britain of course needs to be part of it. The question is whether the transition is being managed in an economically sustainable way.
Manufacturers say they have already spent more than £10 billion on discounts to stimulate EV demand, while industrial energy costs are reported to be some 80% higher than anticipated when the mandate was designed. If consumers are not moving towards EVs at the pace assumed by policymakers, simply increasing the regulatory pressure on manufacturers does not magically create demand.
Indeed, there is a danger that a badly designed mandate forces manufacturers to subsidise EV sales on a huge scale, weakening their profitability precisely when they need capital to invest in new electric models, batteries, software and manufacturing facilities.
That makes little economic sense.
A successful industrial transition requires companies that are financially strong enough to invest. Policy should therefore encourage electrification without inadvertently undermining the companies expected to deliver it.
The government does deserve credit for recognising the strategic importance of the sector. The DRIVE35 programme, including £2.5 billion of funding through to 2035, demonstrates that ministers understand the need to support the automotive transition.
But the question is whether the scale and speed of intervention match the scale and speed of the challenge. Britain is competing with countries aggressively supporting their automotive industries while simultaneously trying to build domestic battery, semiconductor and EV supply chains. The global race is not simply about who can manufacture the cheapest car. It is about who can capture the investment, technology, intellectual property and supply chains of the next generation of mobility.
This is where the stakes become much bigger than JLR.
Automotive manufacturing generates far more than jobs on the factory floor. It anchors research and development, engineering expertise, component suppliers, logistics, universities, technical skills and regional economies. A major vehicle plant creates an industrial ecosystem around it.
Once that ecosystem disappears, it is extraordinarily difficult to recreate. Britain has already experienced the consequences of allowing manufacturing capability to erode. The danger now is that the country repeats the mistake with electric vehicles: importing the technology, batteries and eventually the vehicles while congratulating itself on having achieved the transition to net zero.
That would be a remarkably hollow victory.
The central question is therefore not simply how many jobs JLR cuts. It is whether Britain wants to remain a major automotive manufacturing country or become increasingly dependent on vehicles designed, engineered and built elsewhere.
That is an industrial strategy question. And it requires a much stronger response than telling manufacturers to become more competitive.
The government should treat the current situation as a strategic industrial emergency. Get industrial energy costs down. Give manufacturers a more realistic and flexible route through the EV transition. Provide long-term certainty for investment. And substantially increase the incentives for companies to invest in UK production, batteries and supply chains.
The alternative is deeply uncomfortable. Britain could find itself pursuing decarbonisation while simultaneously losing the industrial capacity needed to deliver it. We could reduce emissions from cars made in Britain while importing an increasing proportion of the cars, batteries and technologies from overseas.
That is not a successful industrial transition. It is deindustrialisation wearing a green badge. JLR’s job cuts should therefore be seen as a warning shot. The question is whether Westminster hears it and acts.
Professor David Bailey works at the Birmingham Business School and is a Senior Fellow at the UK in a Changing Europe programme.
John Clancy and David Bailey