The impact of electric vehicles on the UK manufacturing sector

HiveMind's Business Development Director, Jon Hill , recently visited the Goodwood Festival of Speed and felt inspired to share his thoughts and insights surrounding the impact of electric vehicles on the UK manufacturing sector.

The automotive industry is a vital part of the UK economy, with more than 182,000 people employed in manufacturing and some 780,000 in total across the wider automotive industry. The sector accounts for 10% of total UK exports with more than 130 countries importing UK produced vehicles, generating £77 billion of trade. More than 25 manufacturers are supported by 2,500 component providers.

With less than seven years to go before the 2030 UK’s end-of-sale deadline for new petrol and diesel cars and vans, the race is now on to supply the UK with products to compete with the early pioneers,  Nissan and Tesla. At the Goodwood Festival of Speed this year (2023), an entire “EV Alley” was dedicated to the surge in electric vehicle (EV) production that is reshaping the global automotive industry.

It was clear that the traditional carmakers and Chinese newcomers are accelerating their presence in the UK EV market, and competition is heating up.

It’s not just the original equipment manufacturers (OEMs) that must adapt, but also the crucial Tier 1 and Tier 2 suppliers [1].

A transformation is underway in the revenue mix of automotive manufacturing suppliers. For Tier 1 suppliers, who directly feed into Original Equipment Manufacturers (OEMs), the shift to EVs presents new opportunities and challenges. With EVs having fewer moving parts compared to combustion-engine vehicles, there will be falling  demand for traditional types of engine components. Instead, the focus will be on battery technology, power electronics, and electric motor components — areas where Chinese suppliers currently have a head start[2].

Tier 2 suppliers, feeding into Tier 1, will also feel the shift. They’ll need to adjust their product portfolios and acquire new capabilities to support EV specific parts production. However, the demand for some components, like those used in vehicle interiors or non-propulsion systems, will remain relatively stable.

Manufacturers should anticipate changes in pricing and procurement dynamics. The increased cost of EV components and the concentration of key raw materials in specific geographies could pose significant challenges[3]. Embracing lean principles could be key to mitigating cost pressures and optimising operations[4].

UK suppliers have a competitive advantage: their proximity to OEMs, understanding of local regulations, world leading universities, and established relationships. By leveraging these strengths and adopting new technologies, they can position themselves favourably in the changing landscape.

The implications are clear: disruption is coming, but so is opportunity. Navigating these seismic shifts requires careful strategic planning, deep financial insights, and a solid understanding of agile and lean manufacturing principles.

With HiveMind Network’s extensive experience in manufacturing, lean, and finance operations, we are well placed to guide you through this EV transition.

This pivotal moment presents a unique opportunity for us to shape the future of the UK’s automotive supply chain. Let’s seize it together.

Connect with me or email me at jon.hill@hivemindnetwork.com to discuss how we can shape your supply chain operations for a sustainable future.

For more information on how we can help your business visit HiveMind Network

Footnotes:

1) Source:  Society of Motor Manufacturers and Traders (SMMT) United Kingdom

2) KPMG (2020). China’s leading role in the global auto industry

3) Roland Berger Automotive Disruption Radar 11 2022

4) Womack, J. P., & Jones, D. T. (2003). Lean Thinking