What the 2040 petrol and diesel car ban means for manufacturers

Posted by Ian Jack

Manufacturers - what does the 2040 petrol and diesel car ban mean?

On 26th July 2017, the UK was taken aback by the government’s announcement to ban the sale of new petrol and diesel cars from 2040 onwards in an attempt to tackle Britain’s problem with pollution.

The plan means that in 23 years’ time, those in the market for a new car will likely only have the choice of electric vehicles. Evidently, this marks a huge shift for future customers — and an even bigger change for automotive manufacturers. In fact, everyone involved in the automotive industry will be affected, from manufacturers responsible for creating a single car part to those who will service and maintain the vehicles.

So what exactly does the UK’s plans for 2040 mean for automotive manufacturers? In this blog post, I’ll be weighing up our options to decide whether the move will drive forward the industry or become something of a roadblock.

 

Increasing new business opportunities

As the saying goes, when one doors closes, another one opens — and this is very much the case for automotive manufacturers in the wake of the 2040 news. While the manufacture of parts and components for petrol and diesel cars will slow and eventually cease, manufacturers will have numerous business opportunities as a result of a growing electric vehicle market.

23 years may seem a long way off but it’s important to note that this is a deadline and not a starting point. You wouldn’t start writing an essay on the day it was due, so preparing for 2040 starts now.

With electric vehicles already making their way into the ranges of some car brands, automotive manufacturers — especially those that specialise in creating car parts — need to start preparing for these new business opportunities today. The rise of electric vehicles will be a gradual rollout and you’ll need a strategy to navigate each development along the way.

Leaving it to the last minute is not really an option. If you do, rather than claiming your share of new opportunities, you’ll play catch-up with your competitors who prepared early and have cemented their status as an industry leader.

The automotive industry

 

Widening the skills gap?

Creating electric vehicles will naturally demand different skills, as the technology becomes more complex. Within manufacturing, this could be problematic — widening the already vast skills gap in the industry.

Overall, just 38% of manufacturers currently have the skills that their supply chain needs within their business (Supply Chain Talent of the Future survey, Deloitte). During this period of change, automotive manufacturers need to be at the cutting edge of their industry, with the skills and capabilities they require to create the technology the industry demands.

Car and car part manufacturers have 23 years’ notice; they, along with manufacturers more generally, will need to actively recruit the brightest talent and invest in staff training in order to plug the skills gap. Only then can they truly adapt to their changing industry.

The skills gap extends far beyond manufacturing alone too. The Institute of the Motor Industry (IMI) found that just 1% of mechanics are qualified to work on high-voltage technology, such as that found in electric vehicles, with almost all working for manufacturers rather than independent garages.

Clearly, if 2040’s plans are to go-ahead successfully, we’ll need to see a significant improvement in the UK’s commitment to talent and skills development.

 

A chance to strengthen UK manufacturing

The UK is the 11th largest manufacturing nation overall. Accounting for 12% of the UK’s exported goods, automotive manufacturing is a buoyant sector. Over 30 car manufacturers choose to build over 70 models in the UK, supported by some 2,500 car parts manufacturers and suppliers.

By implementing the 2040 changes, the UK government is presenting manufacturers with the opportunity to become world leaders in the electric vehicle market. Through forcing us to respond early to the growth of electric vehicles and providing additional government funding, we collectively gain an advantage over other countries, who may be dragging their heels.

We’re already starting to see the impact of this; in July, the government made a £246 million investment into electric vehicle battery technology. The UK is already advanced in the automotive revolution and, with investments like this, this is a position we can continue to occupy.

As electric vehicles grow in dominance, car manufacturers will have to offer a larger electric vehicle range. With competition high between brands, they’ll naturally choose the most skilled supply chain. The UK’s position here can be incredibly influential, helping bring more global manufacturing projects to UK shores.

Of course, other countries are also implementing schemes to help reduce emissions, including France, who have also set a 2040 deadline. The UK may have some competition but with the strength of the UK’s current manufacturing market and continued investment and innovation, we’re confident manufacturers can seize every opportunity in the run-up to 2040 and beyond.

If you are looking to improve your supply chain management, the right manufacturing ERP solution can efficiently manage and track all of your operations. Request a manufacturing brochure to find out more.

 

Categories: Manufacturing Trends, Supply Chain

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