Carmakers Jaguar Land Rover (JLR) and Nissan both announced plans for their UK operations in mid-February as they shift towards electrification, providing a boost to the Brexit and pandemic-stricken automotive sector.
JLR announced in a statement on February 15 that it will electrify all its new vehicles by 2025 and keep all its UK plants open, kickstarting its “Reimagine” strategy to become a net zero-carbon business by 2039. A few days later, Japan-based Nissan told reporters it would bring total investment into its UK plant in Sunderland up to more than £1bn over the next few years as it showcased its new hybrid Qashqai model.
JLR plans to invest around £2.5bn annually into electrification technologies, the statement highlighted, adding that the company “will retain its plant and assembly facilities in the home UK market and around the world”, and that its factory in Solihull, West Midlands will manufacture both the architecture behind its new electric Land Rover model and Jaguar luxury vehicles.
At the same time, the statement noted that JLR is preparing to become a “more agile organisation”. The company confirmed to UK media it will cut about 2000 jobs globally in the next financial year. JLR has previously had to change its UK plans following disruption caused by Brexit, and has shed thousands of workers over recent years.
The shift to electrification in the automotive market follows consumer appetite for electric vehicles (EVs). Global plug-in vehicle sales reach 3.24 million in 2020, up from 2.25 million a year earlier, according to industry database EV Volumes.
In 2020, Europe saw a 137% annual increase in EV sales, surpassing China as the leading market.
Amid electrification plans, JLR and Nissan’s announcements come as a partial reprieve to the UK automotive industry, which last year saw the lowest number of foreign projects since 2007, according to the latest figures from greenfield investment tracker fDi Markets.
While greenfield FDI announced in the UK automotive sector rose by 37.8% to an estimated $818m in 2020 – defying the 50% annual decline seen globally – this was also still the lowest level since 2008.
The UK also lags other countries in batteries, which are crucial to both EVs and the green transition. Just six foreign greenfield investments have been announced in the UK battery sector since 2015, ranking the country joint 10th globally, according to fDi Markets.
By comparison, other European markets have attracted significantly more foreign battery projects since 2015, including Germany (34), Hungary (13) and Poland (12), while China is the world’s leading destination with 29.
As part of its net-zero agenda the UK government is aiming to develop its EV industry, with up to £500m of funding allocated for a gigafactory to produce batteries. The West Midlands region, which is home to several major automotive manufacturers including JLR, has developed proposals for a gigafactory at Coventry Airport.
Alongside JLR’s headquarters, Coventry is home to the UK Battery Industrialisation Centre and saw Austria-based AVL Group invest £3.5m back in March 2020 to expand its powertrain research and development facility in the city.
If the gigafactory plans in Coventry go ahead, it will bring an estimated 4000 new jobs and £2bn in investment.
Neil Rami, chief executive of the West Midlands Growth Company, the region’s investment promotion agency, believes the UK should capitalise on the race between carmakers to switch their production from internal combustion engines towards EVs.
“If we are to safeguard existing automotive jobs and attract new investment in the era of electric vehicles, the UK needs to double down on efforts to scale its battery production capabilities at pace,” he said.