The United Kingdom is at risk of falling behind the United States and European Union in the electric vehicle manufacturing race unless it creates its own incentives for domestic production, the nation's auto industry body said in a report Monday.
"Britain's ability to compete as an EV production leader is at risk unless government responds urgently to increasingly fierce international competition," Britain’s Society of Motor Manufacturers and Traders said in the report, which outlined a series of steps it deemed necessary to help its automakers compete.
The report, titled “Race to Zero: Powering Up Britain's EV Supply Chain,” called on the U.K. to provide more incentives, such as tax subsidies for EV battery producers, streamline its plans for battery production, and expand free trade agreements.
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"With other parts of the world turbocharging their support for the zero-emission vehicle transition, we need to step up to compete in this global race," Society of Motor Manufacturers and Traders CEO Mike Hawes said in a statement.
The report comes just days after European Commission President Ursula von der Leyen and President Joe Biden announced at the White House Friday that the two sides will begin negotiations on a “targeted critical minerals agreement” to allow minerals extracted or processed in the EU to qualify for EV tax credits included in the Inflation Reduction Act, the Democratic legislation passed last year that includes major subsidies that are tied to domestic production.
"This kind of agreement would further our shared goals of boosting our mineral production and processing and expanding access to sources of critical minerals that are sustainable, trusted, and free of labor abuses," Biden and von der Leyen said in a joint statement after their meeting.
The Inflation Reduction Act had driven a wedge between Washington and Brussels ever since its passage last August, with EU leaders viewing the law’s “Made in America” provision as discriminatory and a potential violation of international trade laws. Other countries, such as South Korea, have also voiced concern.
Last month, the European Commission unveiled its Green Deal Industrial Plan aimed at helping it compete with the U.S. as an EV maker and a hub for clean energy manufacturing.
But concerns have been mounting in the U.K. that the new U.S.-EU agreements could place its automakers at a competitive disadvantage. Last month, Chancellor of the Exchequer Jeremy Hunt described the Inflation Reduction Act as a “very real competitive threat” and said he expects Britain to issue its own policy response to the law “in the next few months.”
British Prime Minister Rishi Sunak told reporters on Friday that he is discussing these concerns with U.S. and EU leaders, reiterating his belief that it is “better for all of us to maintain free and open markets."
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"We just need to make sure that everyone remembers that that is our best long-term route for all of our prosperity and security," Sunak told reporters.