There aren’t too many sectors which have had more challenges to overcome than the motor industry in recent years.
In this article, Dr Andy Palmer CMG (Former COO of Nissan and CEO of Aston Martin Lagonda) considers what the West Midlands region needs to do to safeguard its automotive legacy and thrive in a post pandemic world.
From Jaguars and JCBs, to Astons and armoured tanks; the Midlands’ rich history in vehicle manufacturing is unrivalled by any other region on these isles. Yet, there are unprecedented challenges to that legacy as the global auto industry goes through the biggest upheaval since the horse gave way to the car.
The cause? Consumer tastes are changing, digital technology is disrupting and macro-economics, be they derived from trade agreements or the pandemic, are causing car makers of all shapes and sizes to rethink strategy.
Most industry commentators would accept that as a result of this disruption, the industry is on a path towards passenger car electrification, with the jury still out on the role that hydrogen fuel cells and synthetic fuels have to play. However, some countries, notably the UK, have been pushing the electrification agenda harder than others. The UK has already announced its intentions to ban the internal combustion engine by 2030, with a short stay of execution until 2035 if the vehicle is a hybrid. In the context of the global climate change crisis, this should be applauded. Nonetheless, by going alone, the UK’s automotive manufacturing hubs risk being squeezed by unsustainable international competition.
So how does the Midlands’ automotive industry avoid suffering the unintended consequences of this well-intended policy?
It is incumbent on governments not to pick technological winners when it comes to meeting our environmental commitments. We’ve been here before and it didn’t end well – think about how various governments encouraged motorists to buy diesel not so long ago! Instead, governments need to define the problems they want to solve and allow the engineers the freedom and space to use their ingenuity to find solutions.
This will create a competitive environment where solutions will then engage in a Darwinist “survival of the fittest”. I’ll explain why this is so important.
Dubbed by some as the “godfather of electric vehicles”, naturally I’m a huge advocate for electric vehicles (EVs). I’m proud to have led the Nissan Leaf project and launch the first mass produced and affordable EV of the modern era. I believe that battery EVs will survive the test of being the fittest technology for passenger cars and urban buses. However, I’m yet to be convinced that the same stands true for HGVs, sports cars and drones/aircraft. For this reason, policy-makers must resist being myopic in concentrating on only EVs to achieve net zero carbon. Doing so will simply hand the advantage to other countries with a more open-minded approach.
The other unintended consequence of taking this kind of leadership occurs if no-one else follows. If Europe, and indeed the rest of the world, do not follow the UK’s initiative, the impact on UK auto manufacturing could be catastrophic.
For multiple reasons, the UK is now only the 16th largest manufacturer of vehicles in the world (having dropped from 3rd in 1960s) and makes only around 1% of the world’s cars. We can dictate the cars sold in the UK, but we cannot dictate the technology employed globally. Twenty-six countries on almost every continent across the globe supply the UK with cars, and many of them build only internal combustion engine vehicles. A unilateral ban on internal combustion engine cars may well mean that the choice for the UK consumer will simply be reduced and more worryingly, some manufacturers, including those operating in the Midlands, may stop producing here.
Instead, UK policy-makers need to use their influence on the world stage to encourage others to follow their lead in restricting the sale of internal combustion cars and then put in place a water-tight strategy to ensure the UK is competitive in a new look auto industry. This is likely to see EVs at the fore for personal transportation and multiple technologies being developed and honed for other mobility needs.
In that scenario, business sense dictates that the bulk of the automotive industry will move to where the batteries are, and we are facing a tight race against the clock to get our house in order. Under the rules of origin terms negotiated in the Brexit deal, from 2024 electric vehicle batteries assembled by UK firms will only be allowed to contain 50% international content or face crippling tariffs on EV exports.
Leaving the European Union provides us with opportunities to compete in the industries of the future. Yet as things stand, France, Germany and the wider EU are showing their intent by making massive investments in factories that produce batteries and electric vehicle components.
For the UK and the Midlands to become a leader in the green economy, it is critical that we do the same.
Whilst I am encouraged that a contractor has been appointed to build the UK’s first proposed gigafactory in Blyth, we mustn’t stop there. The Midlands, with its automotive heritage, first-class universities and vast pool of talent, present an ideal location for the UK’s next gigafactory.
The good news is that a bid for funding for a battery factory in the Midlands has been prepared in partnership with Jaguar Land Rover and all major political parties seem to support the idea in principle of securing a gigafactory for the region. This must be a joint venture between government and private companies to make a success. With governments in Europe and elsewhere offering vast incentives for gigafactory construction, we must not stand idle whilst preaching the sanctity of the free market if our automotive industry, and the 800,000 jobs it supports, are at grave risk.
Amidst the backdrop of a devastating pandemic, the upheaval of Brexit and wildly shifting consumer habits, the coming years present huge challenges to the Midlands’ auto industry. Yet, with the combination of political will and private sector initiative, the Midlands has an opportunity to once again lead the UK’s auto industry as we approach an exciting new frontier.
About Dr Andy Palmer CMG
Andy is a chartered engineer and automotive executive. Having served in leadership positions at both Nissan and Aston Martin, Andy has led transformational change at two of the world’s most recognisable businesses in the industry.
Andy started his career as a 16-year-old Apprentice and then Project Engineer, before joining Austin Rover in 1986, culminating in his appointment to Chief Engineer for Transmission Engineering & Manufacturing. In 1991, Andy joined Nissan and held a succession of positions, including Program Director for Light Commercial Vehicles, Senior Vice-President, and Executive Vice-President before being appointed Chief Operating Officer in 2013.
At Nissan, Andy is best remembered for transforming the product line-up, but was also responsible for Business Strategy and Product Planning, Global Sales & Marketing, IT and the company’s Electric Vehicle and Battery business. He was also Chairman of Infiniti. During this time in Japan, Andy was credited with pioneering ground-breaking technologies, including leading the development of the Nissan LEAF electric car.
In October 2014, Andy was appointed CEO of Aston Martin Lagonda. At Aston Martin, Andy oversaw the launch of four core car models with nine derivatives, including the development and launch of the DBX, the company’s first foray into the growing Luxury SUV market. This led to the company opening a new manufacturing facility in South Wales, UK. Andy’s time at Aston Martin coincided with unique business conditions, including navigating Britain’s withdrawal from the European Union and the COVID-19 pandemic. Nevertheless he was also instrumental in moving the company towards a mid-engined car bloodline, with the creation of the Valkyrie to be launched late 2020.
In 2012, AutoExpress voted Andy into their Hall of Fame as the “Most Influential British Person in the Global Automotive Business” and in 2018, AutoExpress named him “Person of the Past 30 Years”.
Beyond the boardroom, Andy is a licensed race car driver, advises the UK Government on export matters and founded a charitable foundation to fund apprenticeships for young people from disadvantaged backgrounds. In 2014, he was appointed Companion of the Order of St Michael and St George in the New Year Honours for services to the British automotive industry.
Connect with Andy on LinkedIn
Follow Andy on Twitter
Read Andy’s blogs here