Press Story

With one in eight UK built cars exported to the USA, British vehicle manufacturers face an extraordinary challenge
However, the UK green transport manufacturing sector, which includes EVs, has potential to make up for losses
Upcoming industrial strategy must make ‘buying British and buying green’ the easy option, says think tank

If Trump confirms 25 per cent tariffs on US car imports on Wednesday, this will put extreme pressure on the UK car manufacturing industry, threatening jobs and economic growth, finds a new report from the Institute for Public Policy Research (IPPR).

Over 25,000 direct jobs in the car manufacturing industry could be at risk as exports to America are predicted to fall, with UK employees at Jaguar Land Rover and the Cowley Mini factory seen as some of the most exposed.

However, as one door closes another one opens, says the think tank, as the UK is well-placed to capitalise on the transition to net zero and build on its niche of manufacturing green planes, trains and automobiles. The authors say there is only one way to secure transport manufacturing jobs in the UK and that is to double down on making sure Britain is competitive in zero- or low emission-transport products.

As the global export value of internal combustion engine cars fell by 24 per cent between 2018 and 2022, the sale of electric cars soared by 740 per cent, and the UK has pre-existing strengths to take full advantage of this trend.

Over a third (35 per cent) of cars manufactured in the UK in 2024 were electric or hybrid models, many of which were exported.

The think tank says the UK currently has 4,938 firms in the UK that manufacture transport products and their components, with 263,000 employees and an annual turnover of £102.1bn. Many of which already manufacture green transport products, or have the capacity to.

In addition to making up for decreased car exports to the US elsewhere by focusing on capturing the growing international demand for green vehicles, there is also a huge untapped internal market. Car manufacturing in the UK is now 2.5 times lower than car registration – meaning there is currently a significant reliance on importing cars from abroad.

The think tank argues that if the government encourages consumers—both in the UK and internationally—to "buy British and buy green," the UK could boost economic growth, create jobs, and advance key climate goals.

IPPR is advising the government to include the following in its upcoming industrial strategy:

Expand UK demand for green transport products, by offering incentives on domestic made electric cars to consumers, cutting VAT on public charging points and providing grants to lower-income buyers
Leverage the public sector’s purchasing power by electrifying bus fleets and rail lines and ensuring procurement contracts prioritize UK-based producers
Attract investment into green transport manufacturing projects by using the National Wealth Fund and British Business Bank to enter joint ventures with private funders and provide finance to promising businesses
Capitalise on trade opportunities for green transport products, by reducing customs and regulatory frictions with the EU and introducing well-targeted tariff reductions for crucial inputs, such as battery components, to keep manufacturers’ costs as low as possible

Pranesh Narayanan, research fellow at IPPR, said:

“Trump’s tariffs have huge potential to completely destabilise the UK car manufacturing industry, affecting tens of thousands of jobs and putting the government’s growth plans at jeopardy.

“However, as one door closes another one opens. There is huge untapped potential in manufacturing green planes, trains and automobiles and selling them at home and abroad. If the government use the upcoming industrial strategy to drive investment in these sectors, this could be the spark that leads to thousands of new consumers to start buying British and buying green.”

ENDS

Pranesh Narayanan, Simone Gasperin and Dr George Dibb are available for interview

CONTACT

Liam Evans, Senior Digital and Media Officer: 07419 365334 l.evans@ippr.org

NOTES TO EDITORS

The IPPR paper will be available for download at: https://www.ippr.org/articles/planes-trains-and-automobiles
Advance copies of the report are available under embargo on request
Jobs at risk is an estimate of direct manufacturing jobs that could be lost if UK-based manufacturing at US-exposed companies is offshored to avoid tariffs. This is calculated based on employees at UK-based manufacturers that are particularly exposed to US exports, including Jaguar Land Rover, BMW’s Plant Oxford, where Minis are produced, and the projected direct jobs for Agratas’ gigafactory in Somerset, for which Jaguar Land Rover will be a major customer.
IPPR (the Institute for Public Policy Research) is an independent charity working towards a fairer, greener, and more prosperous society. We are researchers, communicators, and policy experts creating tangible progressive change, and turning bold ideas into common sense realities. Working across the UK, IPPR, IPPR North, and IPPR Scotland are deeply connected to the people of our nations and regions, and the issues our communities face. We have helped shape national conversations and progressive policy change for more than 30 years. From making the early case for the minimum wage and tackling regional inequality, to proposing a windfall tax on energy companies, IPPR’s research and policy work has put forward practical solutions for the crises facing society. www.ippr.org