Often attributed to former British prime minister Joseph Chamberlain, the phrase, ‘May you live in interesting times’, perfectly sums up the host of challenges facing the UK automotive sector in 2025. Grappling with the realities of transitioning from fossil fuelled to battery powered vehicles, carmakers both here and across Europe are facing a potentially toxic mix of issues.
Slowing demand, high production costs and charge point anxiety are just the start of the list of woes facing OEMs. Then there’s the infamous tariffs from the Trump administration, which although reduced from 25% down to 10%, include a cap of 100,000 units. It’s therefore easy to see why the industry is feeling embattled.
It’s an understatement to say that EV manufacturers are in a challenging situation. From my time at Jaguar – both here and in the US – I’ve learnt a thing or two about managing OEMs in tough times. Understanding the issues and responding with clarity will prove pivotal to navigating choppy waters.
Labour reprieve on hybrids
To support the UK automotive industry in its transition to zero emission vehicle (ZEV) status, the government officially reinstated the 2030 ban on new petrol and diesel cars and vans that was originally postponed by the previous Conservative government. However, the sale of self-charging hybrids and plug-in hybrid will continue until 2035.
During this period, carmakers must also ensure that their fleet CO₂ emissions do not exceed their 2021 baseline targets. In short, this policy aims to maintain momentum towards full electrification, while allowing time for the industry to adapt.
From a management perspective, pivoting commercial strategies to take advantage of slackening legislation will be an important task for OEMs.
In the wake of US tariffs, the UK government has brought in more flexibility in the way that EV targets are counted. Vehicle manufacturers are now able to exchange any van credits for two car credits. The option to use credits created from reduced fleet emissions (based on 2021 levels), has also been extended to 2029. Finally, manufacturer fines per unit over the required EV target have also been reduced, by a notable £3,000.
These changes have been broadly welcomed by the industry. However, there is still a gnawing desire from automotive leaders in the UK to see a far more compelling set of driver incentives to reignite EV sales.
Another challenge facing the industry is the perceived high upfront cost of electric vehicles. Research from consultancy EY Annual Mobility Survey 2024 confirms that 37% of drivers cited initial outlay as the biggest barrier to adoption. This, along with range anxiety and fears about the accessibility of charging infrastructure are the ‘big three’ issues facing the industry.
While there’s not a lot manufacturers can do about network availability, there are certainly improvements that can be made in the areas of showroom pricing and battery range / rapid charging. There are no magic bullets here – it’s all about incremental gains – however cost reduction strategies and enhanced battery chemistry can both play a key role.
Troublesome tariffs
Trump’s tariffs (now effectively raised from 2.5% to 10%) on UK and EU imported cars in the US have sent a sobering message around the industry. At the time of the initial 2025 rise, JLR and Audi reportedly paused shipments to the US, while other manufacturers, including Bentley and Toyota deferred action until the dust settled.
Granted, while the reduction from 25% to 10% is a relief for many, it must still be remembered that any vehicles over the magic 100,000 figure will be subject to the swingeing tariff rate of 27.5%.
The imposition of these reduced tariff has been broadly welcomed, but still represent yet another unwanted assault on auto makers already facing an unprecedented set of challenges. Yet, despite the heat and fury this situation has caused, it’s important to remember that the journey to EV transition is a one-way ticket. The industry is committed to meeting its EV objectives, which are backed by a tough political will. Given this pragmatic approach, the winners will be those that identify and implement incremental wins.
Last man standing?
From my experience of managing manufacturers through various crises, I think success is all about developing clear strategies that are quickly implemented. The following areas should be considered to ensure maximum competitiveness.
Cost of production: It would be naïve to suggest that the focus on cost reduction and quality (notably through disciplines such as kaizen or TQC) are not already part of most manufacturers’ DNA, but finding the areas ripe for incremental improvement is one strategy worth exploring.
Reviewing the supply chain is an important area. We have recently worked with several manufacturers, helping them to dramatically improve the quality and, in some cases, capacity of their tier 1 and 2 suppliers. By undertaking audits focusing on quality and volumes, we have dramatically improved parts provision, even harnessing AI technology to achieve zero defects. On-time, volume parts supply is the ultimate goal here.
Battery weight and performance are other challenges that require constant attention. Operating concurrently with production, this ongoing R&D function is perhaps best fulfilled by outsourcing to a dedicated partner. The rise of ‘chemist consultancies’ is a relatively new animal in the automotive world, that can provide car makers with vital advantage in the area of battery power delivery and recharging, while reducing weight. We do consult with academic and research organisations such as the Manufacturing Technology Centre, Advanced Propulsion Centre and the Warwick Manufacturing Group, which puts us in a strong position to bring improvements to battery production and management.
On the logistics front, there is also a lot of work to be done on an efficient and safe battery storage and replacement infrastructure in the UK.
Identifying and deploying talent: In uncertain times, the use of flexible talent can be a life saver – reducing overheads, while providing the option of flexing headcount when needed. Typically, during the ramp up phase of a new model launch the requirement for certain skills can increase significantly, while in periods of lower demand fewer designers, engineers or technicians would be needed.
To help manufacturers cope with these dramatic swings in skills demand, we are growing our G&P Talent division – which provides skilled people to manufacturers and OEMs on a short-term basis.
This ethos also carries through to dealer groups, who use our services to plug gaps in garages and repair centres. This improves customer satisfaction scores and brings new efficiencies to the aftermarket supply chain. Clearly, this strategy of developing strong links with partners that can provide ‘in demand’ skills is key for many OEMs.
In the final analysis, the industry is facing a unique set of challenges, the like of which most managers have never seen before. And to add further impetus to automakers’ plans (if they needed any more pressure!) the wave of Chinese OEMs such as BYD, MG and Omoda are gaining a strong foothold in the UK market. We need to act pragmatically, enact quality and cost reduction strategies and keep communicating to allies and partners across the supply chain. We certainly do live in interesting times. And while the saying is often attributed to Chamberlain, it’s also known as the ‘Chinese curse’. Interesting times indeed!
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