UKSIF Calls on UK Government to Provide Greater Transparency on Approach to UK Automotive Industry Transition or Risk Investment Hiatus

• 87% of the UK transport sector, with approximately £150bn invested in the UK, agree that providing a consistent approach to UK Government partnerships with investors, including producing investment prospectuses for gigafactory sites would have a positive effect on investment into the UK.
• 57% of major transport companies have said they have or plan on moving investments out of the UK to a market that is more supportive of their sustainability goals.
• Only 32% of large transport companies in the UK expect to meet their intermediary 2030 carbon reduction targets.

London, 22nd April 2024 – The UK Sustainable Investment and Finance Association (UKSIF), which brings together 300+ members managing over £19 trillion in global assets under management (AUM), is calling on the UK government to provide greater clarity on the long-term strategy to decarbonise the UK transport industry, to improve investor confidence and unlock growth opportunities for this vital sector of the UK economy.

UKSIF believes that the UK Government risks creating an investment hiatus and a flood of private capital being driven to other international markets through, among other areas, its inconsistent and opaque approach to public-private engagements in regard to gigafactory investment.

When placed in stark comparison with other international policies such as the US Inflation Reduction Act, which provides potential investors with easily identifiable rules of engagement, UKSIF says that unless the UK can provide a clear process for investors, it will continue to fall behind and be unable to compete on the global stage for battery production.

Since being signed into law, the IRA has attracted more than $110 billion of private capital investment into new clean energy manufacturing, including more than $70bn into electric vehicle supply chains, showing clear evidence of what a transparent and clear approach can do to unlock higher domestic private sector investment.[1]

This sentiment is backed by UKSIF’s own research, which showed that 87% of the UK transport sector, representing approximately £150bn in UK investment, agree that providing a consistent approach to UK Government partnerships with investors, including producing investment prospectuses for gigafactory sites would have a positive effect on investment into the UK.

James Alexander, CEO at UKSIF comments: “A lack of clarity and certainty on the long-term strategy for the automative sector, is destroying investor confidence, driving much needed private capital overseas and limiting necessary progress on the decarbonisation of the transport sector.

Without certainty from policymakers on targets or transparency on the approach to private partnerships, manufacturers and investors find themselves in limbo – questioning how or why to invest in this sector, and the long-term strategy for UK transport. This is confirmed by our own research into large transport businesses in the UK, where more than half half (57%) have said they have moved or plan on moving investments out of the UK to a market that is more supportive of their sustainability goals.

Moreover, the government’s failure to invest in our home-grown talent and boost investment in areas such as the West Midlands, where a skilled workforce in the automotive industry already exists, risks creating a skill shortage that could see us fall even further behind.

The UK is in desperate need of consistent policy, backed by ambitious targets to retain its powerful position as a world leader in sustainable finance and innovation.”

Read More