Business Briefing: Why the UK is funding foreign car firms

The catalyst was the shift to electrification, explained Constance: “In a growing market, it’s always easier to gain market share than it is with something already established. If you try to gain market share with instrument panels, say, you’re in a zero- sum game. For electric motors, batteries or power electronics, the market is growing, so you’ve got to grab your share.”

Where the UK was failing was in the commercialisation bit of the equation, Constance added: “The UK is great at coming up with new ideas, but what was happening was those ideas were falling on the floor because no one wanted to fund them or they were getting bought by a company and funded elsewhere.”

Manufacturing jobs are the big prize as the UK looks to rebuild the network of automotive production after its erosion over the past three decades.

Constance said his organisation’s funding has created 50,000 jobs, many of them in manufacturing, although declined to give an example of an APC innovation project that has gone on to create a sizeable number of manufacturing jobs in the UK.

It’s clear, however, that the money has predominantly been supporting research and development jobs. That’s not a bad thing, but it’s manufacturing that creates the biggest impact on the economy. 

“The turnover from Nissan making 400,000 cars per year in Sunderland is billions, and there’s a big chunk of that that is UK economy value-add,” said Constance. “A design centre employing maybe a few thousand might have an annual budget of a billion, so the value-add isn’t going to be the same, but the intangible benefits for the industry is hard to quantify.”

He gives the example of Ford. It was handed £4.8 million to help develop the plug-in hybrid Transit Custom van along with partner firms Prodrive (which built early prototypes) and Revolve Technologies, an engineering services provider well known to Ford under its former name, RoushTechnologies.

This might look like poor value when you learn that the van is now in production in Turkey, but Constance disagrees: “Before this, Ford hadn’t done an electrified project outside of Dearborn [its global R&D centre in Michigan, US]. Now the Transit development team in Dunton [Essex] knows how to design an electric vehicle, so when the next Ford competition to engineer a new product comes, Dunton can say ‘we’ve done it’.”

It’s “critical” that the UK retains the ability to engineer a complete mainstream vehicle from start to finish, as exists at Ford, Jaguar Land Rover and Nissan, Constance believes. He said: “Once you lose those full-vehicle design and integration capabilities, you weaken your whole potential as an automotive centre. You become a taker of technology and not an innovator.”

Constance cites the UK’s aircraft industry as one that has lost that capability and suffered as a consequence. It used to be that if a country excelled in R&D, manufacturing would naturally follow as production stayed close to the brains that created the product. But that link is weakening, and in view of the disruption surrounding the move to EVs, the APC has now been given access to new funds with a less cajoling, more direct aim: to build manufacturing capacity. Constance explained: “We’ve said to the government over the past couple of years: ‘This supply chain is coming now, and if we don’t grab our fair share, we’re going to find it very difficult in the future.’”

The resultant £1bn Automotive Transformation fund, launched last year, is run by the APC and expressly there for companies wanting to build factories to produce zero- emissions technology, such as batteries, motors, power electronics and fuel cells.

This is on top of the work to develop and accelerate the UK’s battery industry that is being carried out by the APC’s twin organisation, the Faraday Challenge. 

The ultimate goal is to put the UK back on the path to producing 1.8 million vehicles per year – a figure that was nearly achieved in 2016 before slumping down to 1.3 million in 2019 and to 921,000 last year.