As a trade tariff war erupts across the globe Kevin Crane examines the prospects and challenges of the UK and European vehicle manufacturing sector  

It is difficult to overstate how bad things are in the automotive sector. Mere days after Luton’s Vauxhall plant closed it doors for the last time, after 120 years of manufacturing, all other British-based car producers have been thrown into blind panic by one of US president Trump’s characteristically short-notice announcements of a 25% import tariff on British-built cars sold in the US, a move calculated to practically exclude them from the market. This was additional to the 10% more general tariff that was (or maybe now isn’t) being attached to all British goods and services.  

The British government, caught between its craven submission to Washington on one hand, and the Bank of England on the other, has so far not done anything. The Luton plant closure saw at least a thousand jobs disappear from the already struggling city and we can only guess how many more are now at risk. 

Production falling 

Car production has been in deep decline for a long time and most of the strategies that car manufacturers have been applying as solutions generally turn out not to be. Ostensibly, the plan since the mid-2010s was to keep the industry going by phasing out internal-combustion engine (ICE) vehicles, something that most observers have known is necessary to avert climate disaster for a long time, by encouraging the public to switch to electric vehicles (EVs). To this end, ICE building would come to halt in the year 2030 at which point it was hoped that all the factories could simply be building EVs. Although a wing of the political right never liked this idea, it enjoyed a broad consensus amongst most of society. Unfortunately, just because the electric vehicles  noisiest critics are right-wing, it does not make it right.  

EV issues 

Shifting over to EV production has run up against a multitude of problems, many of them very predictable. The most basic is simply cost to consumers; pretty much as soon as this shift was supposed to happen, the pandemic and then the cost-of-living crisis hit. To make matters worse, the Bank of England hiked interest rates in response to the latter, the cost of buying goods on credit (the main way working class people have always purchased new cars) suddenly became completely out of reach for many.  

This all adds to the very real practical problems with EVs. It is well known that charging them over long distances is a dicey prospect. Even if you only use them for short journeys, you still need to have somewhere to charge them, which is easier said than done if you live in a densely populated urban area with no driveway, or in a block of flats with limited charging points. (As it goes, I live in a block of flats with none at all!) 

The problems with EVs run much deeper than this. There are many serious contradictions when viewing them as a solution to our ecological problems: the energy to charge them with has to be generated somewhere, and if that is a fossil fuel generator, it may well have shifted the pollution elsewhere rather than improving the impact on the environment. This is before we get into the very serious concerns about the environmental cost of the vital lithium that EV batteries require, the extraction of which has been a real source of conflict in so many countries, such as Serbia.  

The batteries also have much shorter service lives than a petrol or diesel engine, meaning that EVs lose resale value far more than the former, and there is also a question of available resources as new cars are built to replace worn-out ones. 

Tougher than anticipated 

None of these are the biggest concerns for car manufacturing companies: their problem is that while they have been pushing the transition from building ICEs to EVs, the reality is that the process is far harder than they had anticipated.  

Western car manufacturers had, until the past fifteen years, had the luxury of selling to a market that had only really changed in superficial ways for decades, and where their highly mature designs, process and supply chains meant that it was difficult for new players to enter the market.  

EVs have caused them a huge upset, because they had severely underestimated just how profoundly they differ from ICE cars as products: the battery does not simply replace the engine of the car, it also eliminates features like a traditional gear box and transmission. This means that having dedicated facilities for making all those components, suddenly goes from being an asset to a liability. Manufacturers are then forced to upgrade plant to compete with rival market competitors. And those competitors are bearing down from China fast. 

China 

The most significant Chinese EV manufacturer, BYD, has already dropped its production costs to the point where Trump’s tariffs may not stop Americans from buying them. Unburdened by the need to retool existing supply and production chains, they simply do not have the weight of ‘dead labour’ that hangs over vulnerable Western companies. BYD has also cracked a ‘fast charge’ technology, which theoretically means that the anxiety associated with long-distance driving could be significantly reduced. All sensible analysis is telling us that European manufacturers are not going to be able to outcompete this challenge in open market conditions. Even more of them could close factories (as has recently been happening to great shock in Germany) or lobby their governments to have their own tariffs.  

The Road Ahead 

Whatever happens, the historic dominance of car manufacturing as a core economic activity does seem to be coming to an end. Despite the hardship associated with this, it’s important for the left not to sentimentalise cars. In a lot of ways the automotive sector has been something of a tyranny in the ‘free’ West. Lobbying from the car and petrol sectors throughout the 20^th century saw many cities move away from genuinely sustainable and ecologically friendly public transport systems; it is a maddening fact that until the 1930s almost every decent-sized English town had a tram network!  

A fixation on private cars has been a disaster for the built environment that most of us have to live in: suburban sprawl basically happened to facilitate car ownership, made car ownership essential and has made shifting to decent public transport unnecessarily complicated. 

It would be relatively easy to argue that government should simply step in and support the car companies. Unlike the case of steel, however, which should definitely be brought entirely back into public ownership, transportation manufacturing is in need of serious reinvention in order to be fit for the future. The left should argue for a socially and ecologically useful re-appropriation of manufacturing facilities; to build products we actually need a lot more of, which in the short term could be electric buses – the type of EVs that actually help the environment – and other public-owned options which would provide people with sustainable access to transport.