Electric vehicle switch could boost UK economy by £16.1bn
Investing in the transition to battery electric vehicles (BEV) could be a game-changer for the UK economy, potentially adding a whopping £16.1 billion to Gross Value Added (GVA) by 2035, according to a recent report commissioned by the Energy and Climate Intelligence Unit (ECIU) with analysis provided by CBI Economics.
The study sheds light on the significant impact that the transition to BEVs could have on the UK economy, showcasing a GVA difference of over £50 billion between the best-case and worst-case scenarios by 2035. This variance is greater than the total contributions of the current automotive sector. The report emphasises that the economic growth could be as high as 35% (£16.1bn) or plummet by 73% (£34.1bn) based on the pace of transition towards manufacturing BEVs.
Currently, the UK automotive sector contributes £46.8bn in GVA and sustains over half a million jobs. CBI Economics projected the growth of the sector, including the BEV sub-sector, across various scenarios from optimistic to pessimistic. The analysis not only highlights the significant variation in GVA but also forecasts potential job loss of up to 404,000 by 2035 in the less optimistic scenarios.
Without a swift transition to BEVs, the UK automotive sector could face the risk of losing three-quarters of its workforce. However, on a brighter note, if BEV growth accelerates by 878% in the next decade, leading to a 745% rise in GVA from BEV production, hundreds of thousands of jobs could be safeguarded. The report also underlines the importance of global competition in the BEV market and the necessity to expand both domestic and export demands.
Louise Hellem, Chief Economist at the CBI, stressed the importance of the UK automotive sector in the country’s economy. She highlighted the opportunities presented by the shift to electric vehicles, urging the sector to utilise its innovation and expertise. Hellem also emphasised the need for a collaborative effort between government and industry to ensure the UK’s competitiveness on the global stage.
Colin Walker, Head of Transport at the ECIU, echoed these sentiments, pointing out the intense global competition for investment in EV manufacturing. He warned that stagnation in the transition could lead to economic downturn and job losses. Walker emphasised the need for the UK to create a conducive environment for investment and modernisation to stay ahead in the race towards building the electric cars of the future.
The report underscores the critical need for a proactive and ambitious strategy to support the evolution of the automotive sector in the UK. It stresses the necessity of incentives and investments to drive the transition towards BEVs, safeguarding jobs and income. Ultimately, the report calls for a concerted effort from all stakeholders to ensure the UK remains competitive and continues to build on its automotive legacy in the era of electric vehicles.
With the right policies and investments in place, the UK has the potential to lead the charge in the global transition towards electric vehicles, securing its place as a frontrunner in the evolving automotive landscape.
Image of report courtesy of ECIU/CBI Economics