Amid tariff uncertainty, UK vehicle production sluggish to its lowest level since 1953 and EV grant chaos
Since 1953, car and van production in the UK has dropped to a minimum, including the pandemic’s closures – a bruise in the automotive sector marked by US tariffs, factory closures and confusion of new electric vehicles (EV) grants.
Automobile Manufacturers and Traders (SMMT) data released showed that auto production fell 7.3% in the first half of the year, while Van Production fell 45%, partly driven by the closure of the Vauxhall Luton plant.
Despite the implementation of the long-awaited US-UK tariff agreement, the upsurge in June put the UK’s automotive industry at its weakest point, which reduced tariffs on UK-made vehicles from 27.5% to 10% despite the small increase in the industry.
SMMT CEO Mike Hawes called the numbers “frustrating” and said he hopes the first half of 2025 marks the industry’s “Nadir”. However, he warned that by the end of this decade, it is unlikely that the UK will return to the 1 million cars in 2021 each year.
“The government’s 2035 target is 1.3 million cars per year, which is our ambition,” Hoth said. “We obviously need at least one (if not two new contestants) to achieve the UK.”
One highlight is the production of electric vehicles, which rose 1.8%. Battery-electric, hybrid and plug-in hybrid models now account for more than two-fifths of production in the UK.
However, SMMT has raised concerns about the lack of clarity of the government’s new EV grant program, which costs less than £37,000 and as much as £3,750. The criteria for eligibility remain opaque when welcoming the return of incentives.
Grants will be awarded based on the carbon footprint of the vehicle and its batteries during production and will only be given to manufacturers with proven scientific goals, but the government has not issued a clear threshold yet.
“We don’t know the difficulty,” Hoth said. “Your dealer cannot tell you if the model you are considering is eligible. ”
He warned that September is the second largest month for new car registration and a need for clarity is urgently needed.
A Transport Ministry spokesman said dozens of models are expected to qualify for new grants, and the £650 million funding will be based on a first come first served basis. The government said it is in close contact with manufacturers and has issued guidance to support the application.
The second largest vehicle export market in the UK is the United States, which several manufacturers stopped or shrank production earlier this year due to uncertainty over President Trump’s ever-changing tariff policies.
According to SMMT, the new US-UK tariff agreement, which came into effect on June 30, has had a small positive impact on June production data. However, Hoth stressed that sustained recovery will require long-term stability and greater policy clarity, especially in EV policies.
As the global electric transition accelerates, the UK is likely to lag behind unless it can attract new investment in battery production, Thousands of Components and domestic parliament.
“We see a record share of electric vehicle production, which is a sign of strength. But the fundamentals are fragile,” Hoss said. “We need certainty, capability and competition conditions to turn recovery into growth.”
While governments still have a big boost to its EV grants and trade deals, SMMT’s warning paints a stark picture of an industry at a crossroads that forces people to urgently need momentum between global headwinds and domestic policy delays.
