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
20th October 2026
and its EV mandate needs a reality check
The UK automotive industry is approaching a critical moment. Decisions taken now on trade, industrial policy and the transition to electric vehicles will help determine whether Britain remains a major vehicle manufacturing nation or gradually loses ground to competitors in Europe, China and elsewhere.
Two issues stand out: securing the UK’s inclusion in the European Union’s emerging Made in Europe framework and putting the UK’s Zero Emission Vehicle (ZEV) mandate on a more realistic footing.
Both are urgent. And both require a much greater degree of pragmatism from the government.
Made in Europe: the UK must be inside
The EU market is absolutely critical to the UK automotive industry. Britain and the EU are deeply integrated through vehicle production, component manufacturing, investment and supply chains. Cars assembled in the UK depend on components moving across borders, while European manufacturers rely on suppliers and production facilities on both sides of the Channel. This is not simply a trading relationship: it is an interconnected industrial ecosystem.
That is why securing the UK’s inclusion in the EU’s emerging Made in Europe framework is mission critical.
The EU is increasingly concerned about its industrial competitiveness, the strength of its manufacturing base and the challenge posed by heavily supported Chinese competitors. Proposals to strengthen European production and supply chains need to be understood in that context. The danger for Britain is that, having left the EU, it could find itself outside arrangements designed to support manufacturing in its largest automotive export market.
That would be a serious strategic mistake. If European incentives, procurement rules or other industrial policy measures increasingly favour vehicles and components meeting European production requirements, UK-based manufacturers could find themselves at a disadvantage. The consequences would extend beyond finished vehicles to the wider network of component suppliers, engineering businesses and manufacturing jobs that sustain the industry.
The government therefore needs to make inclusion in Made in Europe a central objective of its negotiations with Brussels. This is not about reversing Brexit or pretending that the UK and EU have identical interests. It is about recognising an economic reality: the competitiveness of British automotive manufacturing is closely tied to the future of the European market.
There will inevitably be difficult questions about eligibility, rules of origin and the treatment of production outside the EU. But these are precisely the questions that need to be addressed urgently. The UK cannot expect to retain all the benefits of integration without negotiating the arrangements needed to secure them.
What about tariffs on Chinese vehicles?
Securing access to the European framework may involve difficult choices, including accepting some measures intended to protect European industrial capacity. If tariffs on Chinese vehicles are part of that debate, the UK should approach the issue pragmatically rather than ruling anything out in advance.
Chinese manufacturers have become formidable competitors, offering increasingly sophisticated electric vehicles at competitive prices. But their success also reflects the scale of their domestic market, intense competition, huge state subsidies and the advantages available to manufacturers operating within China’s industrial ecosystem.
There is also a question about pricing and margins. Some Chinese manufacturers have been able to generate substantial profits on sales in the UK, although margins vary considerably between companies and models. That suggests at least some manufacturers could absorb part of a tariff rather than passing its full cost on to consumers.
Tariffs are not cost-free. They can raise prices, restrict consumer choice and invite retaliation. Nor should they become an excuse for complacency among UK manufacturers. But neither should the prospect of higher import costs automatically trump the strategic interest in maintaining a viable domestic automotive industry.
The real question is whether Britain is prepared to use industrial and trade policy to support its manufacturing base, or whether it will simply accept the consequences of decisions taken elsewhere. The UK needs a clear assessment of the trade-offs, with long-term productive capacity given proper weight.
The ZEV mandate: ambition must meet reality
The second issue is the UK’s ZEV mandate, which requires manufacturers to increase the proportion of new cars and vans they sell that are zero-emission, principally battery electric vehicles.
The direction of travel is clear. Decarbonising road transport and moving towards electric vehicles are essential objectives. But the current trajectory is too aggressive and too fast. It has become detached from the realities of the market.
The transition depends on more than regulatory targets. It depends on consumers being willing and able to buy electric vehicles, charging infrastructure being available and reliable, prices becoming more affordable and manufacturers being able to manage the transition without undermining investment and production.
Progress in these areas has been uneven. Consumer demand does not match the timetable assumed by policymakers, while affordability remains a significant consideration for many households. Manufacturers face difficult decisions about pricing, product portfolios and the balance between electric, hybrid and conventional vehicles.
A mandate that runs too far ahead of market conditions risks creating unnecessary pressure on manufacturers, distorting commercial decisions and weakening the case for investment in UK production. It also risks provoking a political and consumer backlash against the transition itself.
That would be counterproductive. The objective should be to make the shift to electric vehicles sustainable, not to set a timetable that becomes increasingly difficult to deliver.
A more credible pathway to 2035
As part of its review, the government needs to slow the trajectory of the ZEV mandate and align the UK’s approach more closely with the EU. Greater consistency would help manufacturers
operating across both markets, reduce regulatory uncertainty and provide a more coherent framework for investment.
A 2035 target is perfectly reasonable. What matters is having a credible pathway towards it, with intermediate milestones that reflect market realities and can be adjusted as circumstances change. This is not an argument for abandoning decarbonisation. It is an argument for delivering it in a way that is economically sustainable and politically durable.
Britain needs an automotive strategy, not disconnected targets
Ultimately, these two debates are closely connected. The UK cannot credibly claim to support automotive manufacturing while risking exclusion from the European industrial framework on which much of that manufacturing depends. Nor can it pursue decarbonisation successfully if the regulatory timetable undermines the investment, consumer confidence and industrial capacity needed to deliver it.
The government needs to join the dots. Securing the UK’s place inside Made in Europe must be a strategic priority. The ZEV mandate needs a more realistic trajectory, aligned as far as possible with the EU and consistent with a 2035 destination.
Britain still has an important automotive manufacturing base, skilled workers, established supply chains and world-class engineering capabilities. But these advantages cannot be taken for granted.
The choice is not between protecting the industry and pursuing net zero. It is between a pragmatic strategy that combines industrial competitiveness with decarbonisation, and a set of policies that risks undermining both.
The UK cannot afford to get this wrong.
Professor David Bailey works at the Birmingham Business School.
Print version here
John Clancy and David Bailey
The UK automotive industry is approaching a critical moment. Decisions taken now on trade, industrial policy and the transition to electric vehicles will help determine whether Britain remains a major vehicle manufacturing nation or gradually loses ground to competitors in Europe, China and elsewhere.
Two issues stand out: securing the UK’s inclusion in the European Union’s emerging Made in Europe framework and putting the UK’s Zero Emission Vehicle (ZEV) mandate on a more realistic footing.
Both are urgent. And both require a much greater degree of pragmatism from the government.
Made in Europe: the UK must be inside
The EU market is absolutely critical to the UK automotive industry. Britain and the EU are deeply integrated through vehicle production, component manufacturing, investment and supply chains. Cars assembled in the UK depend on components moving across borders, while European manufacturers rely on suppliers and production facilities on both sides of the Channel. This is not simply a trading relationship: it is an interconnected industrial ecosystem.
That is why securing the UK’s inclusion in the EU’s emerging Made in Europe framework is mission critical.
The EU is increasingly concerned about its industrial competitiveness, the strength of its manufacturing base and the challenge posed by heavily supported Chinese competitors. Proposals to strengthen European production and supply chains need to be understood in that context. The danger for Britain is that, having left the EU, it could find itself outside arrangements designed to support manufacturing in its largest automotive export market.
That would be a serious strategic mistake. If European incentives, procurement rules or other industrial policy measures increasingly favour vehicles and components meeting European production requirements, UK-based manufacturers could find themselves at a disadvantage. The consequences would extend beyond finished vehicles to the wider network of component suppliers, engineering businesses and manufacturing jobs that sustain the industry.
The government therefore needs to make inclusion in Made in Europe a central objective of its negotiations with Brussels. This is not about reversing Brexit or pretending that the UK and EU have identical interests. It is about recognising an economic reality: the competitiveness of British automotive manufacturing is closely tied to the future of the European market.
There will inevitably be difficult questions about eligibility, rules of origin and the treatment of production outside the EU. But these are precisely the questions that need to be addressed urgently. The UK cannot expect to retain all the benefits of integration without negotiating the arrangements needed to secure them.
What about tariffs on Chinese vehicles?
Securing access to the European framework may involve difficult choices, including accepting some measures intended to protect European industrial capacity. If tariffs on Chinese vehicles are part of that debate, the UK should approach the issue pragmatically rather than ruling anything out in advance.
Chinese manufacturers have become formidable competitors, offering increasingly sophisticated electric vehicles at competitive prices. But their success also reflects the scale of their domestic market, intense competition, huge state subsidies and the advantages available to manufacturers operating within China’s industrial ecosystem.
There is also a question about pricing and margins. Some Chinese manufacturers have been able to generate substantial profits on sales in the UK, although margins vary considerably between companies and models. That suggests at least some manufacturers could absorb part of a tariff rather than passing its full cost on to consumers.
Tariffs are not cost-free. They can raise prices, restrict consumer choice and invite retaliation. Nor should they become an excuse for complacency among UK manufacturers. But neither should the prospect of higher import costs automatically trump the strategic interest in maintaining a viable domestic automotive industry.
The real question is whether Britain is prepared to use industrial and trade policy to support its manufacturing base, or whether it will simply accept the consequences of decisions taken elsewhere. The UK needs a clear assessment of the trade-offs, with long-term productive capacity given proper weight.
The ZEV mandate: ambition must meet reality
The second issue is the UK’s ZEV mandate, which requires manufacturers to increase the proportion of new cars and vans they sell that are zero-emission, principally battery electric vehicles.
The direction of travel is clear. Decarbonising road transport and moving towards electric vehicles are essential objectives. But the current trajectory is too aggressive and too fast. It has become detached from the realities of the market.
The transition depends on more than regulatory targets. It depends on consumers being willing and able to buy electric vehicles, charging infrastructure being available and reliable, prices becoming more affordable and manufacturers being able to manage the transition without undermining investment and production.
Progress in these areas has been uneven. Consumer demand does not match the timetable assumed by policymakers, while affordability remains a significant consideration for many households. Manufacturers face difficult decisions about pricing, product portfolios and the balance between electric, hybrid and conventional vehicles.
A mandate that runs too far ahead of market conditions risks creating unnecessary pressure on manufacturers, distorting commercial decisions and weakening the case for investment in UK production. It also risks provoking a political and consumer backlash against the transition itself.
That would be counterproductive. The objective should be to make the shift to electric vehicles sustainable, not to set a timetable that becomes increasingly difficult to deliver.
A more credible pathway to 2035
As part of its review, the government needs to slow the trajectory of the ZEV mandate and align the UK’s approach more closely with the EU. Greater consistency would help manufacturers
operating across both markets, reduce regulatory uncertainty and provide a more coherent framework for investment.
A 2035 target is perfectly reasonable. What matters is having a credible pathway towards it, with intermediate milestones that reflect market realities and can be adjusted as circumstances change. This is not an argument for abandoning decarbonisation. It is an argument for delivering it in a way that is economically sustainable and politically durable.
Britain needs an automotive strategy, not disconnected targets
Ultimately, these two debates are closely connected. The UK cannot credibly claim to support automotive manufacturing while risking exclusion from the European industrial framework on which much of that manufacturing depends. Nor can it pursue decarbonisation successfully if the regulatory timetable undermines the investment, consumer confidence and industrial capacity needed to deliver it.
The government needs to join the dots. Securing the UK’s place inside Made in Europe must be a strategic priority. The ZEV mandate needs a more realistic trajectory, aligned as far as possible with the EU and consistent with a 2035 destination.
Britain still has an important automotive manufacturing base, skilled workers, established supply chains and world-class engineering capabilities. But these advantages cannot be taken for granted.
The choice is not between protecting the industry and pursuing net zero. It is between a pragmatic strategy that combines industrial competitiveness with decarbonisation, and a set of policies that risks undermining both.
The UK cannot afford to get this wrong.
Professor David Bailey works at the Birmingham Business School.
Print version here John Clancy and David Bailey