The road to zero

If there were a prize for the industry that has done most to boost the UK’s economic growth over the past decade, the automotive sector would be a serious contender.

In 2009, in the aftermath of the financial crisis, fewer than a million vehicles rolled off UK assembly lines. Since then, however, motor manufacturing has enjoyed a remarkable resurgence, with production increasing to a high of 1.72m units in 2016.

Great British marques like Jaguar, Mini, Bentley and Range Rover are in huge demand around the world. Nissan and Toyota’s UK plants remain among the most efficient in Europe. And automotive exports are at all-time record levels.

But these achievements provide few clues to the transformation that the industry will experience over the next 20 years. Indeed, future historians will look at them as the end of an era for traditional UK car manufacturing.

The truth is that amid all the marketing hype, the fundamentals of vehicle design have changed little over generations. The vast majority of cars produced today are still powered by internal combustion engines burning fossil fuels, directly controlled 100 per cent of the time by human beings. Just as they were a century ago.

No longer. The automotive industry is in the early throes of a technological revolution. The most urgent challenge is to decarbonise motoring. In the UK, our ambition is for Britain to be a global leader in zero emission vehicle manufacturing and use. That’s why this summer the government announced its “Road to Zero” strategy and hosted the first ever international Zero Emission Summit.

By 2030, we want ultra-low emission vehicles (ULEVs) to make up at least half of new UK car sales. By 2040, we want all new cars and vans sold here to be effectively zero emission. Under 2 per cent of new cars were ULEVs last year, so that’s a huge pace of change.

But the cars of the future will be intelligent too, a fact that has triggered a huge race between established manufacturers, new entrants and disruptive software and other technology companies to define what intelligent motoring will be. Autonomous, yes—in time. Connected, yes—this is already happening. Offering new transport services—ditto.

But there is also a huge industrial opportunity here. So we also want to pioneer the development of automated vehicles, and their service models and use, in both urban and rural areas.

To achieve this, the government is investing nearly £1.5bn between 2015 and 2021, in one of the most comprehensive support programmes for ULEVs in the world. We have committed £250m up to 2021 to support more than 200 companies and research organisations in this fledgling market, and to offer a regulatory environment that is more open to safe, self-driving car testing than any other in Europe.

In Milton Keynes for instance, self-driving pods are being tested that can move on their own over a chosen route. The human operator interacts using a touchscreen in the windshield. After swiping to select a destination, they can sit back and read the news, check their email or play a video game.

The development of these next generation cars will provide huge opportunities for new entrants. In the past, technological advances in the industry were incremental, with high barriers preventing access for innovators and newcomers, and the big automakers extracting as much value as possible from what went into their vehicles.

These days, not so much. There is huge scope for smaller technology developers to make a big impact.

But there are big questions about where the value will lie for investors in tomorrow’s motor industry. Will it be in manufacturing vehicles, or in components—even though there are far fewer moving parts in electric cars than the petrol models of today? Will it be in power, electronics, motors and drives? Or will it be in the platforms that emerge to bring together services for consumers? Or will the brands of mobility providers become the motoring giants of the future, usurping those of the car manufacturers?

From a national perspective, there are huge challenges and opportunities. A key industrial challenge is to increase the value of UK content in many of the cars built here. That’s why we have made a major investment in battery technologies through the Faraday programme.

But the opportunity is enormous: to make the UK the best country in which to develop and manufacture the cars of the future. This country already offers a superb balance of automotive talent, a strong safety culture, well-designed regulation, huge access to capital and technology, and superb testing environments. Now we need to work with industry to make the most of this potential.

 

Jesse Norman MP is Minister of State at the Department of Transport, and the author of acclaimed books on Edmund Burke and Adam Smith