Could Increased Job Prospects Sway the UK Government to Back Electric Cars?

Even though the UK government has recently announced a multi-million pound programme which will see electric cars trialled throughout the UK there is a feeling amongst many observers that this is only a piecemeal approach to the sector. This is an area of the automotive industry which needs significant investment, significant backing and to be pushed to the masses. However, the announcement that Toyota is considering building a hybrid version of its bestselling Auris hatchback model in the UK has opened up a potentially interesting option for the authorities.

The UK economy

It is no secret that the UK economy, together with many other economies around the world, has suffered dramatic falls in output in the aftermath of the credit crunch. Unemployment in the UK is forecast to hit 3 million before falling back as and when the UK economy starts to improve. However, the problems with GM Europe and the issue of Vauxhall related jobs in the UK together with the demise of LDV have literally crippled the UK automotive industry.

This was an industry which prior to the loss of Jaguar to a US owner and the closure of a great numbers of car manufacturing plants was a leader on the world stage. But could the electric car market offer a new opportunity for the UK government to potentially inject tens if not hundreds of thousands of jobs into the UK economy?

Government backing

We are now at the stage, with Toyota seriously looking at the UK as a base for its European push of hybrid cars, where the UK government needs to make a decision about the future of electric and hybrid cars. The Toyota Auris will be the first petrol/electric car to be manufactured in Europe and there are high hopes that Toyota could be the first of many overseas car manufacturers to re-enter the UK market.

If the UK government is able to offer both financial and practical assistance to these operations we could see the creation of a new UK car manufacturing industry from the ashes of the old one. Even though the embers of the former world leading car manufacturing industry have long gone cold there are still many highly skilled workers in the UK with decades of experience in the sector.

Increasing demand for electric cars

While Toyota and other car manufacturers may well use the UK as a springboard into Europe there will need to be a growing UK market and UK demand for electric vehicles. Even though there has been to some extent a natural increase in demand for hybrid and electric cars, with a move to reduce damage to the ozone layer and the environment, the UK government will need to lead by example. When you consider that only a single digit percentage of UK government vehicles, which include political and local authority vehicles, are powered by electric or of the hybrid variety, there is much work to be done.

Taxation of the UK electric car market

Even though there is a growing debate as to how the UK government could replace the significant tax revenue it receives from petrol sales in the UK, by actively encouraging electric car manufacturers to use the UK as their European and potentially worldwide base, this could bring in significant corporate tax income for the authorities. While this would not replace the potential loss of petrol tax income but it would go some way to reducing the burden as and when the electric and hybrid car market starts to gain widespread approval.

The car scrappage scheme

The car scrappage scheme which was introduced by the UK government, which is ultimately a copycat of other schemes in Europe, gave the UK authorities the perfect opportunity to increase demand for electric and hybrid vehicles. However, while there was an initial focus upon more environmentally friendly cars the fact that there are so few vehicles available in the UK which fit the criteria is something of a letdown. The criteria for the car scrappage scheme appears to have been slackened somewhat and rather than highlighting the use of electric and hybrid cars the potential £2000 discounts are now available on all new cars registered after May 2009.

There are hopes that when the electric car market grows in the UK and more vehicles are made available to the mass market, the UK government may well introduce some form of tax incentive, either in the form of reduced road tax or potential discounts on purchases, to nudge people in the direction of more environmentally friendly cars.

Is this the perfect opportunity for the UK government?

The UK authorities, both the current government and past governments, have been accused of leaving the historic UK car manufacturing industry high and dry. While the likes of France and America regularly offer substantial subsidies to their car manufacturers, the UK government was happy to let them stand on their own two feet, something which eventually saw the vast majority either closed down or taken over by overseas parents.

However, there is now the opportunity to build up some momentum for the UK electric car and hybrid car markets and attract the likes of Toyota and other leading mass-market manufacturers. Whether the UK authorities will be brave enough to grab this particular opportunity with both hands and push it forward remains to be seen but there is the potential to increase tax income, employment and the possibility of pushing the UK to the front of the eco-friendly car market.

Conclusion

We saw the likes of Toyota and Nissan using the UK in the 1980s and 1990s as a base for their European operations. It looks as though history could repeat itself again if Toyota goes ahead with plans to build the Toyota Auris hybrid vehicle in the UK and use this as a base for the European market. It is also interesting to see that while Tesla Motors is a US based company the operation has a joint venture agreement with Lotus to manufacture the company's electric vehicles in the UK.

This could just be the tip of the iceberg of the future UK electric car market and could ultimately see the re-emergence of the UK car market, although hopefully second time round we will not see the sector "sold down the river".