Britain's car sales in 2020 fell to their lowest since 1943 and industry experts are warning that the worst is yet to come as the UK leaves the European Union.
Battery Supplies Could Solve Crisis?
The Society of Motor Manufacturers and Traders (SMMT), the country's industry trade body, said that the UK's auto-sales crisis might be resolved if the government ramps up investments in gigafactory projects.
More gigafactories within 10 years could help maintain battery supplies in the electric vehicle industry, the trade body said. With sufficient battery supplies for EV production, sales could catch up in the coming years.
Data revealed last year that new-car sales fell to nearly 30% to 1.63 million. The figures amount to the lowest annual sales drop since World War II.
COVID Adds Insult To Injury
SMMT chief executive Mike Hawes said the sector as a whole "lost half a million units from March, April, May - and we never recovered them."
Hawes said "click and collect" services from automakers and car dealers will help keep manufacturing rolling despite the health crisis.
Click and collect services allowed dealers to sell vehicles remotely and during lockdowns.
Brexit Could Deal More Damage
The industry has lost an estimated $27.3 million during the pandemic and more damage could be dealt after the post-Brexit agreements were made by the UK and the EU.
Among the companies that were already struggling were Nissan and Honda Motor. Nissan announced that it would no longer build an electric model in England while Honda will shut down its British plant this year.
According to the Brexit trade deal, automakers should source 10% more local battery components than what Britain originally required before Brexit. Carmakers are given only three years to make sure that batteries contain 50% local materials. If this requirement is not met, tariffs are due.
Japanese carmakers could come across some stumbling blocks in terms of the deal's rules of origin and this problem could further slow production.
The first three years post-Brexit will determine the flexibility of non-European automakers in sourcing battery materials from within the UK or the EU without driving costs up.