The UK’s automotive industry is facing significant challenges, with car production in 2024 falling to 779,584 units, an 11.8% decrease from the previous year.

This marks the lowest annual output since 1954.

The decline is attributed to plant closures, such as Jaguar’s Castle Bromwich facility, and manufacturers retooling for electric vehicle (EV) production.

Unplugged

Figures released by the SMMT (Society of Motor Manufacturers and Traders) show that car production fell by 17.7% in January 2025 year on year.

Despite the downturn in production, UK new car registrations grew by 2.6% in 2024, reaching 1,952,778 units.

EVs accounted for a record 19.6% of these registrations, totaling approximately 382,000 vehicles.

However, this fell short of the government’s mandated 22% target for zero-emission vehicles.

Private consumer demand for EVs remained low, with only one in ten private buyers opting for electric models.

Winter ICE

In January 2025, the negative sales trend continued with a 2.5% decline in new car sales compared to the same month the previous year, totalling 139,345 units.

This decline was primarily due to a significant drop in petrol and diesel (ICE) vehicle sales, which overshadowed the growth in EV and hybrid registrations.

But an increasingly competitive landscape is evolving, with Chinese manufacturers increasing their presence in the European EV market.

EU manufacturers have complained that the competition is unfair, with Chinese manufacturers benefitting from their government’s financial support over the previous decade.

Musk do better

Tesla, the champion of EVs worldwide and highly popular in the UK and Europe, has seen its sales significantly drop over the last few months.

Many commentators are linking this to his support for and participation in the new Trump presidency in the US.

In January 2025, Tesla’s European sales nearly halved, while China’s SAIC Motor saw a 37% increase, capturing a 2.3% market share.

Additionally, Chinese EV maker BYD surpassed Tesla in UK sales for the first time.

Tricky environments

These developments occur as both the European Union and the UK enforce stringent zero-emission targets.

The EU aims to end sales of new petrol and diesel cars by 2035, while the UK has set an earlier deadline of 2030.

However, European carmakers face challenges in meeting these targets due to high production costs, competition from more affordable Chinese EVs, and consumer concerns over high prices and insufficient charging infrastructure.

The earlier daten in the UK has only exaggerated these issues.

The UK’s automotive industry is at a critical juncture, navigating declining production, shifting consumer preferences, and ambitious regulatory requirements in the transition toward electrification.

As a result, the Department of Transport is currently holding a consultation on the Zero Emissions Vehicles (ZEV) mandate.

Support and safety

Unite, the UK trade union which has a significant representation in UK vehicle manufacture, is calling for more government action to prevent a potential collapse of British car manufacturing.

The union has submitted a strategy to reform the mandate, support the UK automotive industry and achieve a just transition for workers.

Unite general secretary Sharon Graham said: “The ZEV Mandate’s focus on sales alone won’t electrify Britain’s roads – it’s a blunt tool that risks jobs instead of boosting EV adoption. Unite’s proposed reforms offer a smarter path, aligning with net zero goals by driving EV sales, supporting UK production, and protecting thousands of automotive jobs.

“The UK auto industry is at a crossroads, with thousands of jobs on the line. The government must act to prevent the low-volume crisis from permanently shrinking the sector. Labour’s industrial strategy must chart a clear path through industry upheaval, ensuring a just transition for auto workers.”

Unite’s ZEV proposals include additional credits for UK-made vehicles to relax limits.

It would also like the UK ban on internal combustion engine vehicles to be delayed until the European Union’s 2035 deadline unless there is a proven strategy to defend jobs, which ZEV does not currently deliver.

Beyond ZEV, there are calls for VAT reductions on UK-made EV sales for private drivers, improved investment in charging infrastructure and action to homogenise and cut charging costs across the UK to encourage EV sales.