Unless net zero rules are eased quickly and significantly, UK carmaking will be decimated
Daily Telegraph 14/12/25
The latest UK growth numbers are disastrous for this hapless Labour Government and terrible news for the broader economy.
GDP fell 0.1pc in October compared to the previous month. Construction lagged, down 0.6pc, while the UK’s services sector, three quarters of our economy, saw a 0.3pc drop.
Over the three months to October, industrial production shrank 0.5pc, driven by an 18pc fall in vehicle manufacturing. The cyber-attack on Jaguar Land Rover (JLR) cast a long shadow, halting production at its UK plants for the whole of September.
JLR’s output has since partially recovered, helping to lift economy-wide production 1.1pc over the month, preventing the headline October GDP figure from dropping more steeply. Yet despite the return of some JLR output, total UK carmaking remains well below levels seen in August.
Britain’s economy has stagnated since the summer, amid still high inflation and energy costs and deeply counter-productive policy speculation – fuelled by Chancellor Rachel Reeves and her aides – ahead of last month’s Budget statement.
Labour has piled tax and regulation onto businesses, which has hit hiring. Unemployment has surged from 4.2pc when Labour took office in July 2024 to 5pc – a four-year high, with youth unemployment pushing 16pc.
UK GDP has contracted in nine of the last 16 months and four of the last seven, under a Government that promised to “kickstart growth”. Yet under Labour, and the Tories too, the UK’s vital automotive industry has endured particular pain.
Carmaking peaked at 1.9 million units in the late 1990s and was still 1.7 million in 2016. Since 2019, though, automotive output is down sharply – in part due to Covid, but with the drop continuing since.
From 905,117 vehicles in 2023, to 779,584 in 2024, the industry is forecasting 2025 output of 755,000 vehicles – a 16.6pc output loss over two years. British carmaking is at its lowest ebb (ex-pandemics) since 1952.
The sector is foreign-dominated of course, with JLR owned by Tata, Bentley by Volkswagen, Vauxhall by Stellantis and Rolls-Royce by BMW. The top 10 carmakers in Britain are all overseas-owned.
Yet automotives remain a vital part of UK manufacturing and the broader economy, turning over tens of billions of pounds each year, generating billions in taxation and employing almost a million workers – often in relatively well-paid jobs regions such as the Midlands and North East, where such jobs can be scarce.
A sector-wide collapse would be an economic, political and societal catastrophe. But that’s where we’re heading unless Labour gets beyond virtue-signalling and eases net zero rules, quickly and significantly.
UK carmaking will otherwise be decimated, as production becomes economically unviable and the market is overwhelmed by a flood of heavily subsidised Chinese-made electric vehicles (EVs).
Since 2023, carmakers in Britain have faced hefty penalties that have actively discouraged them from producing vehicles, courting financial ruin if they do.
These zero-emission-vehicle (ZEV) mandate fines initially applied if 22pc of new vehicles carmakers sold domestically weren’t fully electric, with carmakers paying an eye-watering £15,000 for every vehicle by which they fell short.
But EVs are expensive, seen as unreliable and drivers have “range anxiety”, given our patchy and often expensive charging network. They also depreciate quickly and the second-hand market is slow.
Despite large tax breaks on fleet vehicles, just 18.7pc of new vehicles sold last year were EVs, well below the ZEV mandate – with take-up stuck stubbornly below 20pc for several years now.
And since the start of 2025, that ZEV cut-off has ratcheted up to 28pc – and will steadily increase to 80pc by 2030, when new petrol and diesel cars are set to be outlawed completely.
No wonder UK carmakers are slowing down petrol and diesel production – because EV sales are barely strong enough to match even a 22pc market share, let alone the current 28pc and target escalations to come.
With EV sales demanded by the ZEV-mandate running way ahead of demand, carmakers have been discounting EVs heavily, often losing money when they do, in a bid to avoid pulverising fines.
They’ve even been “rationing” conventional cars, with low EV sales forcing them to try to limit fines by curtailing petrol and diesel production.
BMW this year stalled plans to restart production of electric Minis at its factory in Oxford while Stellantis announced the closure of its long-standing Luton plant – in part due to ZEV rules.
Policymakers in the UK and European Union have bet the ranch on EVs. But the market, not public sector bureaucrats, should decide on the best technology. Many senior car industry executives believe, for instance, a better solution is hydrogen-powered internal combustion engines which charge smaller, lighter batteries – needing no plug-in and far less reliant on China-controlled rare earths.
Yet the renewable lobby is powerful, as are the companies both building and financing the painfully slow rollout of the UK’s charging network. Huge vested interests are at work to maintain an iron grip over the “EVs or bust” narrative, as the UK purses an insane ZEV-mandate policy that is far more radical than other carmaking nations.
Last week it emerged that the EU is thankfully dropping its flagship pledge to ban sales of new petrol and diesel cars by 2035, under huge pressure from German and Italian carmakers.
This leaves Britain hugely isolated, with Energy Secretary Ed Miliband clinging to the 2030 ban he reimposed, after the Tories had pushed it five years later. Will reality prevail, with Labour realising its net zero obsession is about to destroy one of the UK’s most pivotal industries?
The answer is probably no. Why? For no better reason than – while Labour’s trades union bosses disdain job-destroying net-zero – these nutty policies are backed by plenty of the MPs and party activists who want to make Miliband leader.
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